Two days ago, Bitcoin.com News reported on the crypto hedge fund Three Arrows Capital (3AC) after reports claimed that the company was allegedly struggling with financial hardship and possible insolvency. Now the crypto firm Finblox is feeling the effects of 3AC’s troubles, and a few digital currency companies have liquidated the hedge fund’s leveraged positions.
Speculation Concerning Financial Hardships Tied to Three Arrows Capital Continue
There’s a lot of rumors and speculation surrounding the crypto hedge fund Three Arrows Capital (3AC), and it seems to be affecting other crypto companies as well. Arguably, 3AC’s problems started with its investment into the Terra blockchain, as it purchased $559 million worth of locked LUNA (now luna classic), which is now worth just under $700. The Twitter account called The Defi Edge (@thedefiedge) explained in a Twitter thread that after the Terra fallout, 3AC allegedly tried to get funds back by using more leverage to earn back its Terra investment losses.
Although, markets shuddered even more after the Terra LUNA and UST implosion, causing a significant amount of liquidations across the entire crypto industry. Another account called Degentrading (@hodlkryptonite) said 3AC borrowed from every major lender and the firm faced significant liquidations this week. Furthermore, there’s been speculation that 3AC was dumping a great deal of Lido’s wrapped ether product called stETH, which was putting a burden on the stETH peg. Then a company backed by 3AC called Finblox detailed that it had to pause rewards (up to 90% APY) for all of its users, and the platform upped withdrawal limits as well.
Furthermore, after The Defi Edge finished his Twitter thread, a company (Protocol X) that 3AC invested in and wished to remain anonymous, told The Defi Edge that 3AC was holding the project’s treasury. “3AC invests in different seed rounds of companies. The protocol raises money usually in USDC / USDT. Well, the treasury is usually sitting around doing nothing. So a common deal 3AC did with their protocols is ‘manage’ their treasury,” The Defi Edge wrote. The Twitter account added:
3AC’s Treasury Management. 3AC gave an 8% APR guarantee on the treasury. So protocols would park the funds raised by 3AC + additional parts of their treasury. The protocols felt safe because well…it’s 3AC. Protocol X has mentioned that the ghosting is real. They’ve talked to two other protocols who also mentioned…