Major Singapore-based derivative crypto exchange Three Arrow Capital (3AC) firm is rumored to be insolvent when it failed to meet margin calls from various multibillion-dollar decentralized lenders. These include BlockFi and Genesis, a big financial service company, according to Financial Times. The insolvency has occurred in the company when it has experienced at least a $400 million liquidation from several investors.
Recently, Three Arrow Capital sold its $40 million worth of assets including Lido’s stETH (Staked Ethereum). Undoubtedly, it did cause a panic selling and a major fall in the Ethereum’s Ether (ETH) prices as well. According to Twitter, the organization took two huge loans of $264 million and $35 million from Aave and Compound. To save the loans from liquidation, 3AC sell off their stETH.
Last week, three major crypto-trading platforms FTX, BitMEX, and Deribit liquidated their assets from 3AC when it failed to meet margin calls. Whereas 3AC owes a big chunk worth $6 million to BitMEX, FTX and Deribit are still in a position to digest the losses.
Moreover, both the founders of the organization were accused of overlooking the internal problems and misleading the community. The founders of 3AC, Su Zhu and Kyle Davies have decided to appoint a legal and financial adviser to pull them out of this financial crisis. Also, they will be helping the involved investors to compensate for their current losses. Su Zhu communicated with the fellow crypto community and reassured them that the firm is fully committed to repaying its debts and will work this out soon.