Better known as 3AC, 3 Arrows Capital was until recently one of the leading cryptocurrency investment funds. But in recent days, reports of his financial health have raised fears of bankruptcy.
After the collapse of Terra’s blockchain projects and the blocking of withdrawals on the platform of staking Celsius, it’s 3 Arrows Capital’s turn to experience a bad patch, according to several observers. But since mid-June, more and more analysts are reporting problems in 3AC’s accounts. Some don’t hesitate to use the term insolvency – and in an interview with the Wall Street Journal, the founder confirmed the poor health of the company.
3 Arrows Capital, abbreviated to 3AC, is not just any platform. It is one of the most important investment and speculation funds in the cryptocurrency sector: the company manages a capital of over 3 billion dollars. This large fund means that 3AC has positions in many cryptocurrency companies and has invested in major blockchains. And if the platform ever goes bankrupt, the consequences could be disastrous for an entire part of the ecosystem.
What is happening with 3 Frecce Capital?
To put it simply, A3C is a hedge fund. It’s pretty much the same as an investment fund, except that these hedge funds (also called hedge fund) take stocks in riskier sectors to get better returns and use loans to back them up. They are therefore considered risky investments.
The situation in which A3C finds itself today is quite complicated, and is linked to the fall in value of several tokens, including stETH. But he had also invested $ 200 million in Luna, the Earth project whose value collapsed in a few days and is no longer worth it. Between Luna’s debacle and the drop in the price of cryptocurrencies, some specialists believe that 3AC would no longer have sufficient collateral for the loans it subscribed to. If so, the company could default.
Analysts came to these conclusions by seeing the transactions carried out on wallets presumably belonging to 3AC. For a few days, the company and its founders were walled up in silence. But, in an interview with the Wall Street Journal on June 17, they finally confirmed 3AC’s dire situation.
The company is ” explore all options “in order to avoid non-payment,” including the sale of their assets and the acquisition by another company “Explains the WSJ. ” The fund hopes to reach an agreement with its creditors so that it has more time to find a solution. ”
What are the consequences?
If the company were to default, the repercussions on the cryptocurrency world would be catastrophic. In addition to managing the funds of many companies and individuals who may lose some of their money, 3AC has also borrowed large sums to finance these investments.
If the platform defaults and fails to repay its loans, the domino effect is felt throughout the cryptocurrency world. The first company to suffer the downfall of 3AC would be the Celsius staking platform, which granted it a loan, and which in turn is experiencing significant liquidity problems. Other lenders would also be concerned, as well as the projects in which 3AC has invested.
Waiting for confirmation of the situation from Zhu Su or the company, they are therefore all in crypto holding their breath – and hoping to escape the worst.