A new report has revealed that venture firm Three Arrows Capital (3AC) has reportedly failed to meet margin calls from lenders. The developments have once again brought up the risk of insolvency following the brutal collapse of crypto markets earlier in the week.
The report stated that crypto lender BlockFi was one of several companies that liquidated some of 3AC’s positions.
Is Insolvency On The Cards?
Well-placed sources have revealed in a report that Three Arrows Capital could potentially be facing insolvency after going through several liquidations. The sources revealed that the hedge fund’s liquidations totaled around $400 million, with the hedge fund’s founder Su Zhu tweeting that they are in touch with relevant parties.
“Well-Placed Sources’ Say Three Arrows Capital Was Liquidated for at Least $400 Million, Hedge Fund Allegedly Maintains ‘Limited Contact With Its Counter-Parties.”
There are growing fears that the hedge fund founded by Zhu and Kyle Davies back in 2012 could be on the verge of insolvency, stated the report. The sources also revealed that 3AC maintained only limited contact with counter-parties after the wave of liquidations.
A Falling Portfolio
Data from Dune Analytics has revealed that Three Arrows Capital’s current portfolio is around $372.47 million and has seen a change of nearly $139.12 million in the last 24 hours. The hedge fund’s portfolio is relatively diverse, consisting of tokens including AAVE, BAT, CEL, FTT, GUSD, LIDO, and LINK. Currently, $166 million is locked in USD coin (USDC), with the second-largest allocation held in serum (SRM), with the allocation standing at around $46 million.
3AC was also heavily invested in the Terra ecosystem and faced a significant loss of capital thanks to the collapse of the LUNA and UST. 3AC has so far not commented directly on the reports emerging about its possible insolvency, with founder Su Zhu making only a vague statement about the developments. He stated,
“We are in the process of communicating with relevant parties and fully committed to working this out.”
Su Zhu has not tweeted since the 7th of June, with the founder’s silence making investors jittery since Zhu has also not responded to any questions from them.
Crypto’s Problems Continue To Mount
The liquidations faced by Three Arrows Capital and its potential insolvency come at a time when the crypto space is already facing several issues. Developments around Celsius, Justin Sun’s Tron facing issues with its USDD stablecoin, and Microstrategy’s losses have made markets extremely jittery. Add to this the fact that the global economy is also facing a recession, with inflation wreaking havoc.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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