The future of crypto hedge fund Three Arrows Capital (3AC) is becoming more and more uncertain, facing potential insolvency after being liquidated by its lenders.
Rumours abound that the investment firm – which counts the likes of options exchange Deribit and financial services firm BlockFi among its venture bets – is scrambling for a solution on how to repay lenders and other counter-parties after they liquidate by lending firms – the names of which are not apparent.
It’s speculated that the liquidation totalled at least $400 million. Additionally, that the firm has maintained limited contact with its counter-parties since the event.
Three Arrows Capital has backed projects like Avalanche, Polkadot, and Ether. Which are all down 57%, 38.8%, and 47% over the last 30 days respectively.
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The fund also sustained significant losses during the collapse of the Terra ecosystem last month, heavily in its native token LUNA.
The firm reportedly managed approximately $10 billion at market peak by some estimates. Being led by former classmates Su Zhu and Kyle Davies.
Zhu, co-founder and CEO of Three Arrows Capital, addressed rumors regarding the crypto investment firm’s operations and solvency in a tweet on Tuesday evening.
Zhu also recently took to twitter, saying his ‘supercycle’ bull case on the crypto maret was “regrettably wrong”
On this, he said: “Supercycle price thesis was regrettably wrong, but crypto will still thrive and change the world every day.”
The supercycle was an idea by Zhu that suggests the crypto market would gradually rise during this market cycle. Ultimately, to avoid a sustaining bear market.
In an interview on the UpOnly podcast in February 2021, Zhu suggested that bitcoin’s price could go as high as $2.5 million per coin if bitcoin were to capture the same market value as gold.
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