Sam Bankman-Fried weighed in on the current Three Arrows Capital crisis via Twitter, with the FTX founder and CEO saying it “couldn’t have happened with an on-chain protocol that was transparent.”
Singapore-based crypto investment firm 3AC last week was rumored to be insolvent after allegedly failing to meet margin calls from several lenders, including BlockFi and financial services company Genesis, according to the Financial Times.
Researchers also claimed via Twitter that the company took out a $264 million loan with Aave and a $35 million Compound loan.
The transactions haven’t been confirmed, but several big lenders to 3AC, including crypto exchange BitMEX, have started liquidating their positions, while portfolio companies are distancing themselves from the hedge fund.
BitMEX and Others Exiting Three Arrows Capital Amid 3AC Insolvency Fears
Three Arrows Capital was a darling among crypto investment firms for years. Now, amid the crypto bear market and after the Terra collapse last month, 3AC appears to be at real risk of insolvency and crypto companies have taken steps to insulate themselves from the distressed firm. Rumors that the Singapore-based firm could be insolvent started swirling last weekend. Since then, co-founder Su Zhu has only said cryptically on Twitter that Three Arrows, which also goes by 3AC, was "in the process...
Bankman-Fried’s suggestion came in response to a tweet asking industry figures how to “best ensure that a 3AC moment doesn’t happen again.” The CEO said that the top priority wasn’t “making sure no one ever goes under,” but keeping institutional credit transparent to retail investors.
The FTX CEO tweeted “regulation can help here” before following it up with, “so can DeFi,” adding the crisis would not have been possible with transparent on-chain DeFi apps.
Three Arrows Capital’s founders, Zhu Su and Kyle Davies, were accused of ghosting the public after their social media accounts were inactive for a few days.
Is Multibillion-Dollar Hedge Fund Three Arrows Next to Unravel? Here’s What’s Going On
Something’s amiss at Singapore-based crypto hedge fund Three Arrows Capital, but it’s not yet clear whether that means the firm is insolvent, as the rumors spreading across the cryptosphere suggest. The hedge fund, which was founded in 2012 and manages an estimated $10 billion, has positions in many of crypto’s largest projects and companies: Bitcoin, Ethereum, Solana, Axie Infinity, and BlockFi. On Wednesday afternoon, it looked like Three Arrows Capital, which also goes by 3AC, had been sellin...
Zhu eventually broke his Twitter silence on Wednesday and admitted the hedge fund was having problems, but didn’t elaborate: “We are in the process of communicating with relevant parties and fully committed to working this out.”
On Friday, Davies told the Wall Street Journal that 3AC has hired legal and financial advisers “to help work out a solution for its investors and lenders.” He mentioned several options, including asset sales or a bailout by another firm.
