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- As the cryptocurrency market continues to fall, more and more investors are facing liquidation of their assets.
- Zhu Su, the co-founder of Singapore-based cryptocurrency venture capital firm Three Arrows Capital (3AC), refutes rumors that the company is struggling with insolvency.
Bitcoin(BTC) fell to $20,100 today, and the entire cryptocurrency continues to bleed. Individual investors aren’t the only ones affected by this decline. Giant cryptocurrency investment companies are also on the verge of bankruptcy. One of them is the company of Zhu Su, Three Arrows Capital. Here are the details:
Cryptocurrency bankruptcy
The future of cryptocurrency hedge fund Three Arrows Capital looks bleak as the firm faces potential bankruptcy after liquidation by creditors. The fund company has reportedly been liquidated by some major creditors. The liquidation occurred in the last 30 days, and the firm, which backs projects such as Avalanche, Polkadot, and Ethereum, which lost 57 percent, 38.8 percent, and 47 percent respectively, have lost money as critical thresholds have been exceeded.
Three Arrows Capital also invested in the native token Terra LUNA, where they lost a significant amount of money. The firm, which by some estimates managed nearly $10 billion and was at the top of the market, is run by former classmates Su Zhu and Kyle Davis.
We are in the process of communicating with relevant parties and fully committed to working this out
— 朱溯 🐂 (@zhusu) June 15, 2022
Zhu, a cryptocurrency bull, went to Twitter a few weeks ago to admit that bullish expectations of a “super cycle” in the cryptocurrency market are “unfortunately wrong.”
“Unfortunately, the super cycle price thesis was wrong, but cryptocurrency will still evolve and change the world every day,” he said in late May.
The idea of a super cycle came from Zhu, who suggested that the cryptocurrency market would gradually rise during this market cycle, avoiding a perpetual bear market.
Rumors that 3AC can’t avoid a margin call began after 3AC began moving assets this week to replenish funds on decentralized funding (DeFi) platforms such as Aave to avoid potential liquidation amid this week’s drop in the price of Ether (ETH). According to unconfirmed reports, 3AC is facing liquidation of hundreds of millions in several positions.
Another address associated with Three Arrows Capital repaid ETH in Aave: Lengding Pool after exchanging 38,900stETH for 36,718.64ETH. There are currently 19,612.37stETH left at this address. https://t.co/GOPHnLptEq
— Wu Blockchain (@WuBlockchain) June 14, 2022
DeFi-banking platform Celsius is also feverishly strengthening positions to avoid liquidation. Celsius funds account for a significant portion of the total value locked up in the various DeFi ecosystem platforms, while 3AC is a major borrower. The collapse of one or both of them would have significant consequences for the entire space.
Su Zhu’s cryptic statement as rumors swirl of 3AC liquidations
Zhu Su, co-founder, and CEO of Three Arrows Capital responded to rumors about the crypto investment company’s operations and solvency.
The tweet came amid widespread social media speculation among cryptocurrency marketers that recent conditions in the cryptocurrency market have negatively impacted Three Arrows to the point that it is now facing bankruptcy.
This wallet (tagged as 3AC on Nansen) has been aggressively paying back AAVE debt against its 223k ETH / $264mm position to avoid liquidation. With $198mm in borrowings against it, @ a 85% liq threshold, a -11% move in ETH to $1,042 liqudates ithttps://t.co/y7yJJ0NlMc pic.twitter.com/2S55Rzl9Xc
— Onchain Wizard (@OnChainWizard) June 15, 2022
The fund suffered significant losses during the collapse of the Terra ecosystem last month after a large investment in the Terra LUNA native token and now faces further market turmoil after cryptocurrency lender Celsius suspended withdrawals Monday.
Faced with the need to liquidate hundreds of millions of dollars, Three Arrows Capital’s future looks uncertain. They have $183 million in debt with $235 million in collateral in AAVE V2 alone. If Ethereum falls to $1,014, the margin position will be liquidated. As of this writing, Ethereum is finding buyers at $1,030.
Also Read: Falling below these prices would trigger a disastrous bleed for Bitcoin and Ethereum: BitMEX CEO
