Singapore-based crypto hedge fund manager Three Arrows Capital (3AC) You may be bankrupt and you are doing a round on social media.
Three Arrows Capital Crypto Hedge Fund Can Go Bankrupt
June 14, 2022 https://t.co/z4wtQX9LsO pic.twitter.com/BKmB1ebAw8
— Web3 is on track (@ web3isgreat) June 15, 2022
The company is widely recognized as a leading player in the cryptocurrency world. Recent investment activities included a $ 20 million round of funding on the DEX platform Orderly Network on June 9th and a $ 2.5 million capital injection at data analytics firm Laevitas as a major investor.
However, there are rumors that recent market turmoil may have overexposed the company. With so many tentacles that span many different crypto projects, the question arises: can any counterparty be seriously affected?
Is 3AC dumping assets?
Rumors began when on-chain analysis showed Tuesday that 3AC withdrew the on-deposit stETH from the DeFi protocol Aave. According to Defiant, it sold funds over several transactions totaling about $ 40 million.
stETH, or Staked Ether, represents Ethereum locked into a Beacon Chain Staking Agreement (which cannot be withdrawn until the Mainnet Merge is rolled out). stETH acts as collateral for borrowing more ETH on the DeFi platform. In other words, this is a “workaround” that releases value from tokens locked in Beacon Chain Staking contracts.
Twitter user @MoonOverlordTaking into account the social media activities of Kyle Davies and SuZhu, co-founders of Three Arrows Capital, we combined the two to file a bankruptcy filing.
Is there a problem with 3AC?Swirling rumors
– Kyle and Chu haven’t tweeted or liked for days
– Zhu took out all the coins and # tags from his bio
– Zhu deleted his Instagram
– One hour ago, they dumped 30k stETH and reduced all AAVE positions.—Moon (@MoonOverlord) June 14, 2022
Further analysis by @MoonOverlord speculated that 3AC’s stETH “dumping” was the payment of debt.
People think Celsius is the largest stETH damper, but its 3AC isn’t relatively close and dumps to all accounts and seed round addresses. In most cases, it seems to repay debt and unpaid debt. pic.twitter.com/9bZnmTXQzj
—Moon (@MoonOverlord) June 14, 2022
Will stETH be the straw that broke the camel’s back?
Derived tokens can be exchanged for Ethereum when a mainnet merge occurs, so stETH is to be traded with Ethereum at a 1: 1 parity.
However, since June 9th, the “peg” has shown signs of slipping. On June 13, stETH fell to 0.89 against ETH.
The day after the first signs of slip, stETH token issuer Lido The price of DEX tweeted that it does not affect the ability of holders to redeem ETH on a 1: 1 basis.
The staking ETH issued by Lido is backed by a 1: 1 ETH staking deposit.
stETH: The exchange rate between ETH reflects fluctuating secondary market prices, not the underlying backing of the ETH bet.
— Lido (@LidoFinance) June 10, 2022
Nonetheless, stETH holders who want to close their position will be sold at a discounted price. All of these point to a volatility-resistant DeFi vulnerability.
Zhu I posted an ambiguous tweet on Wednesday, suggesting that the situation at Three Arrows Capital isn’t okay and that “stakeholders” are affected.
We are in the process of communicating with stakeholders and are working hard to resolve this.
— ZhuSu ? (@zhusu) June 15, 2022
More will continue as the situation progresses.
