The major crypto hedge fund Three Arrows Capital (3AC) is rumored to be insolvent, with reports suggesting the firm has already faced massive liquidations and on-chain data indicating large sales of ethereum (ETH) staked on staking provider Lido in the past week.
3AC is one of the largest hedge funds in the crypto industry, and a crash, it is widely believed, would have large and widespread consequences, as the industry was hit by the Terra crash in May, and a major crypto lender, Celsius, got into troubles this week.
The rumors that have circulated about 3AC are largely based on on-chain data from the Ethereum network. The Block reported that the fund has already faced liquidations of several hundred million US dollars.
Per data from blockchain forensics company PeckShield, ETH 15,743 (USD 16m) “supposedly related to 3AC” have been liquidated today.
At the time of writing (09:20 UTC), ETH traded at USD 1,026, down nearly 16% in a day and 44% in a week.
Meanwhile, reports also indicate that the firm has apparently sold large amounts of staked ETH on Lido, represented by stETH tokens, which have come under pressure in the market. At the time of writing, stETH traded at USD 972 (down 16% in a day and 46% in a week) versus USD 1,026 for ETH.
Although each stETH is backed by 1 ETH staked on Ethereum’s Beacon chain (Ethereum 2.0), the actual ETH tokens that are staked remain locked and inaccessible for now.
Earlier on Wednesday, the rumors were for the first time addressed by Zhu Su, the company’s co-founder and CEO:
“We are in the process of communicating with relevant parties and fully committed to working this out,” Zhu wrote in a brief update on Twitter at around 1 AM UTC.
He did not provide any further details.
The statement was met with confusion and more questions by members of the crypto community.
“What does this mean,” asked Darren Lau, a former analyst at crypto hedge fund Spartan Group, while Dylan LeClair, a popular Bitcoin (BTC) analyst at UTXO Management said: “Wow. Rumors of insolvency at Three Arrows Capital look to be confirmed.”
The statement was the first tweet in three days from Zhu, a leading voice in the crypto community who is normally a very active Twitter user. Meanwhile, users have also noticed that Zhu has recently updated his bio on the social network, removing all mentions of crypto projects he had previously spoken warmly about, including Solana (SOL), Avalanche (AVAX), Terra (LUNA), and Ethereum, leaving only Bitcoin (BTC).
The popular Three Arrows Capital CEO has also reportedly deleted his Instagram profile in recent days.
There has been no official statement from Three Arrows Capital about the issues the company is facing.
Kyle Davies, the company’s other co-founder, has not tweeted anything since June 6.
Cryptonews.com reached out to the company for comment.
– Su Zhu on Three Arrows Capital & Regulation
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– Celcius Reportedly Hiring ‘Restructuring Lawyers’ as Bankruptcy Speculation Mounts, CEL Pumps & Dumps
– Celsius Tops Up More Collateral to Avoid Loan Liquidation, Faces ETH Squeeze