Three Arrows Capital faces possible insolvency

A Singapore-based crypto hedge fund Three Arrow Capital aka 3AC which has been one of the biggest investors in recently crumbled Terra, is allegedly facing insolvency after unexpected liquidation totaling hundreds of millions of US dollars from multiple positions, raising concerns in the crypto community that 3AC might be the next big player in crypto to collapse amid the ongoing bear market.

Rumors that 3AC has been facing insolvency issues started to circulate on Tuesday when 3AC appeared to be withdrawing staked Ethereum (stETH) totalling roughly $40M worth of stETH, according to on-chain data. stETH, which is traded at a face value with ETH, has also sharply de-pegged last week.

3AC in trouble? rumors swirling

- Kyle and Zhu havent tweeted or liked anything in days
- Zhu took every coin and # tag out of his bio
- Zhu deleted his instagram
- an hour ago they dumped 30k stETH and reduced all AAVE positions
— moon (@MoonOverlord) June 14, 2022

These talks have been fuelled after Su Zhu, one of the founders of 3AC, removed all the mentions of 3AC investments in ETH, AVAX, LUNA, SOL, NEAR, MINA, DeFi, and NFT from his Twitter bio keeping only BTC. On top of that, Twitter users have also noticed that Su Zhu has deleted his Instagram account and that both he and Kyle Davies, the other co-founder of 3AC, have been silent on Twitter for the past three days.

Oops pic.twitter.com/MF1LvTgBmx
— terry tsang (@terryts44059147) June 13, 2022

This morning, Su Zhu finally broke the silence on his Twitter, saying that they were in the process of working this out.

We are in the process of communicating with relevant parties and fully committed to working this out
— Zhu Su 🔺 (@zhusu) June 15, 2022

According to crypto reporter Colin Wu, 3AC has a total debt of $183 million in USDC+USDT and now the hedge fund is actively repaying it in order to avoid the liquidation of collateral. Moreover, the aforementioned reporter who goes by the nickname Wu Blockchain on Twitter also stated that in May, 3AC lost roughly $31.37 million through trading on Bitfinex.

The address marked as Three Arrows Capital has a collateral position of 211,999.12aWETH (worth $235 million) on Aave V2 and a total debt of $183 million USDC+USDT. If ETH falls near $1014, the collateral position will face liquidation. It is actively repaying the debt now.
— Wu Blockchain (@WuBlockchain) June 15, 2022

DeFi Teller reached out to Kyle Davies, however, he has not responded as of the time of this writing.