Three Arrows Capital (3AC) suffers margin calls and liquidations from its creditors

3AC faces a series of liquidations

Three Arrows Capital (3AC)the Singaporean cryptocurrency investment fund, is having a hard time following liquidations. Indeed, several players in our ecosystem confirm or imply that positions of the company have been cut, following unmet margin calls.

If we already mentioned this situation a few days ago, new elements have since appeared. The Wall Street Journal claimed that 3AC had recruited legal and financial advisers to overcome the situation.

Among the options considered to overcome the crisis, the company considers both the sale of assets, than the takeover by another company. Kyle Davies, the co-founder of 3AC, admits the plight, but still hopes to find solutions:

“We have always been convinced by crypto and we still are. We are committed to problem solving and finding a solution that is fair to all parties involved. »

According to our colleagues from The BlockBitMEX announced that 3AC had suffered $6 million in liquidations on the platform. A similar situation would have taken place on the side of FTX, but no precise figures have been revealed.

On the other hand, Derebit, which offers options trading in cryptocurrencies, confirms that Three Arrows Capital is a shareholder of the company since February 2020. She also insists that while some positions are potentially insolvent on the platform, this will not affect other customers’ funds. This would also be valid, even if none of these debts were to be repaid:

It is important to emphasize that each company in account with Three Arrows Capital, ensures that the contagion effect on their other clients is not on the agenda.

👉 To go further – Find our guide to facing the bear market

Address analysis

The on-chain analysis work of the Professor String, which works on our private group Le Grille-Pain, allowed us to highlight addresses belonging to 3AC, in addition to those already identified by the community. One of them shows us that emergency measures have been taken a few days ago, in order to free up liquidity:

Movements on address 0x3ba21b6477f48273f41d241aa3722ffb9e07e247

In chronological order, the red box shows us the arrival of several thousand ETH, from two addresses of 3AC. These ETH are then used to repay debt on the Aave protocol (AAVE) and liquidity is then withdrawn. Thus, the two transactions of type Withdraw of this box correspond to a total of 30,000 stETH.

We then come to the orange box. This one shows us that these 30,000 stETH are traded at a loss for 28,340 ETH via 0x Protocol. This again makes it possible to repay debt on Aave and withdraw 39,500 stETH. Such transactions have been regularly repeated over the past few days. This often involves amounts amounting to several millions, even tens of millions of dollars.

The items underlined here illustrate the idea that the hedge fund had to make asset sales to cover losses. At the same time, it highlights the fact that 3AC is participating in the loss of parity between ETH and stETH, in order to overcome these liquidations. The spread between the two assets is currently around 6.2%.

These decisions to sell at a loss stem from the fact that the company could no longer honor the collateral necessary to maintain its loans, on platforms such as Aave or Compound (COMP). Given the ambient noise within the crypto community, it is difficult, at present, to sort out the true from the false to establish an accurate inventory of losses.

Other potential losses

Various elements also suggest that 3AC suffered liquidations on other platforms. But we must be careful with these assertions. Indeed, Zac Prince, for example, the CEO of BlockFi publicly certifies the liquidation of a very important clientbut he does not reveal its identity for the moment:

A similar statement was also made by Michael Moro, the CEO of Genesis Trading:

Again, Three Arrows Capital is not explicitly cited for the sake of confidentiality. Therefore we can only assume and not say that it is indeed the company. In addition, BlockFi and Genesis Trading also point out that their clients’ funds are not affected in this case.

In order to establish an overview of the situation, Alex Svanevik, CEO of Nansen, a portfolio analysis platform, invites all entities in account with 3AC to come forward :

Under this Twitter conversation, we do indeed find names that we have already mentioned in this article.

We also invite the actors who would be concerned by the situation, to contact us on this email address :

👉 [email protected]

This context of crisis is putting many companies in difficulty. Thus, we see every day that this decline generates a kind of natural selection, among the strategies that have been adopted so far. While some will emerge stronger from this bear market, not everyone will recover and there is no doubt that we will see other similar cases appear in the future.

👉 Also in the news – American sues Elon Musk for “influencing” the price of Dogecoin (DOGE)

Sources: The Wall Street Journal, 3AC addresses, Etherscan, stEHT data

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About the Author : Vincent Mayor

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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
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