3AC risks a series of liquidations
Three capital arrows (3AC)Singapore’s cryptocurrency investment fund is having a tough time following liquidations. Indeed, several actors in our ecosystem confirm or suggest that the company’s positions have been cut, following unmet margin calls.
If we already mentioned this situation a few days ago, new elements have appeared since then. The Wall Street newspaper claimed that 3AC had recruited legal and financial consultants to overcome the situation.
Among the options considered to overcome the crisis, the company considers both the sale of assets, which the acquisition by another company. Kyle Davies, the co-founder of 3AC, admits the predicament, but still hopes to find solutions:
“We have always been convinced by cryptocurrencies and still are. We are committed to solving problems and finding a solution that is fair to all parties involved. “
According to our colleagues from The blockBitMEX announced that 3AC had suffered $ 6 million in liquidations on the platform. A similar situation would have occurred on the FTX side, but precise figures have not been disclosed.
On the other hand, Derebit, which offers cryptocurrency trading options, confirms that Three Arrows Capital he is a shareholder of the company from February 2020. It also insists that while some positions are potentially insolvent on the platform, this one it will not affect the funds of other clients. This would also apply, even if none of these debts were to be repaid:
We confirm that Three Arrows Capital has been a shareholder in our parent company since February 2020.
–Deribit (@DeribitExchange) June 16, 2022
It is important to point out that every company on account with Three Arrows Capital ensures that the contagion effect on other customers it’s not on the agenda.
👉 To go further – Find our guide to dealing with the bear market
The on-chain analysis work of the Professor String, which works on our private group Le Grille-Pain, has allowed us to highlight the addresses belonging to 3AC, in addition to those already identified by the community. One of them shows it to us emergency measures have been taken a few days ago, to free up liquidity:
Movements on address 0x3ba21b6477f48273f41d241aa3722ffb9e07e247
In chronological order, the red box indicates the arrival of several thousand ETH, from two addresses of 3AC. These ETHs are then used repay the debt on the Aave protocol (AAVE) and the liquidity is then withdrawn. Hence, the two type transactions Retire of this box correspond to a total of 30,000 stETH.
We come then to the orange box. This shows us that these 30,000 stETHs are traded at a loss for 28,340 ETH via protocol 0x. This once again allows you to repay the debt on Aave and withdraw 39,500 stETH. Such transactions they were regularly repeated in recent days. This often involves amounts of several millions, even tens of millions of dollars.
The items underlined here illustrate the idea that the hedge fund had to do asset sales to cover losses. At the same time, it highlights the fact that 3AC is participating in the loss of parity between ETH and stETH, in order to overcome these liquidations. The spread between the two assets is currently around 6.2%.
These decisions to sell at a loss stem from the fact that the company could no longer honor the collateral necessary to maintain its loans, on platforms such as Aave or Compound (COMP). Given the ambient noise within the crypto community, it is currently difficult to distinguish true from false to establish an accurate inventory of losses.
Other potential losses
Various elements also suggest that 3AC liquidations immediately on other platforms. But we must be careful with these claims. In fact, Zac Prince, for example, the CEO of BlockFi publicly certifies the liquidation of a major customerbut for the moment it does not reveal its identity:
BlockFi’s risk management practices and systems allow us to take decisive action to mitigate risk in accordance with our contracts. These actions may include margin calls and liquidation of assets as appropriate.
—Zac Prince (@BlockFiZac) June 16, 2022
A similar statement was also made by Michael Moro, CEO of Genesis Trading:
1 / Although our policy is to never deal with specific client activities, we believe it is prudent to provide clarity and transparency to the market in times of great volatility and speculation. We want our counterparties and clients to know the following:
—Michael Moro (@michaelmoro) June 17, 2022
Again, Three Arrows Capital is not explicitly mentioned for confidentiality reasons. Therefore we can only assume and not say that it is actually the company. Furthermore, BlockFi and Genesis Trading also point out that their clients’ funds are not affected in this case.
In order to establish an overview of the situation, Alex Svanevik, CEO of Nansen, a portfolio analysis platform, invites all entities on account with 3AC to come forward :
Keep a tally of entities with liabilities against 3AC.
Feel free to DM if you’ve been hit.
– Alex Svanevik🐧 (@ASvanevik) June 18, 2022
Under this conversation on Twitter, we find in fact names that we have already mentioned in this article.
We also invite actors who would be affected by the situation, to contact us at this email address :
This context of crisis is putting many companies in difficulty. Thus, we see every day that this decline generates a kind of natural selection, among the strategies adopted so far. While some will emerge stronger from this bear market, not all will recover and there is no doubt that we will see more similar cases appear in the future.
👉 Also in the news – The American sues Elon Musk for having “influenced” the price of Dogecoin (DOGE)
Sources: The Wall Street Journal, 3AC addresses, Etherscan, stEHT data
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