Three Arrow Capital (3AC), a leading crypto hedge fund, is in deep trouble like fellow crypto firm Celsius. The fund is moving crypto assets to boost funds on DeFi platforms like AAVE to avoid potential liquidations. Three Arrow Capital took this decision as Ethereum’s price sunk to nearly $1,000.
This triggered speculation on social media that the Singapore-based venture capital firm is unable to meet a margin call. Moreover, rumor mills are rumbling that 3AC faced liquidations – a whopping $400 million – from multiple lenders. Ryan Selkis, from Messari Crypto, speculated that 3AC is repositioning its balance sheet after being on the wrong side of two synthetic trades, with sizes in GBTC and stETH. Wu Blockchain added that the fund lost about $31.37 million through trading on Bitfinex in the month of May. Moreover, 3AC has maintained limited contact with its counterparties since being liquidated.
It should be noted that 3AC sustained significant losses during the fall of the Terra ecosystem last month. The fund had invested heavily in LUNA. Su Zhu, the co-founder of Three Arrow, admitted late last month that his supercycle price thesis was wrong. However, he believes crypto will still thrive and change the world every day. The supercycle idea states that the crypto market will gradually rise during this market cycle, and avoid a sustained bear market.
Zhu said the company is in the process of communicating with relevant parties and is fully committed to working this out. Speculations heightened after Zhu removed all mention of investments in ETH, Avalanche, Terra LUNA, Solana, NEAR Protocol, Mina, and NFTs from his Twitter bio. It is also believed that he has deleted his Instagram. Questions are being asked about why Su Zhu and co-founder Kyle Davies have been inactive on the microblogging platform Twitter for three days.
Other renowned personnel in the crypto space highlighted that 3AC is the next firm to take the bullet after Terra and Celsius.