According to The Block, on Wednesday, Dubai-based crypto fund Three Arrows Capital is facing insolvency after it acquired at least $400 million in liquidations.
As per the report, Three Arrows, also known as 3AC, was liquidated by crypto lending firms and is currently paying back lenders and other counterparties.
Su Zhu and Kyle Davies, the firm’s founders, have been among the most vocal participants in the crypto markets in recent years, betting on non-fungible tokens (NFT), decentralized finance (DeFi) applications, and layer 1 blockchain tokens, and cryptocurrency companies.
Zhu appeared to respond to rumors on Twitter this morning. “We are in the process of communicating with related parties and are fully pledged to work this out, he said, without going into further detail.
Ether (ETH), Solana (SOL), and Luna are among the tokens listed as investments on the 3AC website (LUNA). Prices for these have fallen by 77 percent, 90 percent, and 99.7 percent, respectively, since their lifetime highs, according to CoinGecko data.
3AC’s problems coincide with reports that cryptocurrency lender Celsius may be insolvent. The company handled billions of dollars in user funds and may not have sufficient capital to pay out investors.
According to reports, one of the strategies used by Celsius included the use of staked ether (stETH), a derivative linked to the ether whose peg was lost and could have caused contagion risks.
Meanwhile, on-chain data indicates that 3AC is selling existing crypto positions in order to reduce collateral requirements for specific positions. According to blockchain data, one of 3AC’s wallets owes $183 million.
At the time of writing, 3AC had not responded to requests for comment.
