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What happened with Three Arrow Capital (3AC), according to crypto fund’s market maker 

Lilit Chichyan
By Lilit Chichyan 4 Min Read
three arrows capital, 3AC, 8 Blocks
image from medium.com

YEREVAN (CoinChapter.com) – Danny Yuan, the chief executive of market maker 8 Blocks Capital, tweeted a lengthy thread explaining the financial firm’s stance on the hedge fund Three Arrow Capital (3AC) controversy.

Contents
8 Blocks and 3AC partnershipWill Three Arrows Capital pay up?

As CoinChapter previously reported, 3AC could face insolvency, i.e., the inability to pay their obligations after the margin call, much like Celsius, a competitor lender/borrower.

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8 Blocks and 3AC partnership

Yuan stated that 8 Blocks partnered with 3AC in Nov. 2020 and paid them a fee “to use their trading accounts.”

Practically, 8 Blocks could withdraw at any time and keep 100% of the profit and loss (PNL). Additionally, 3AC vouched not to move market maker’s funds without permission, as it would increase the risk of 8 Blocks’ positions getting liquidated. In return, 3AC charged fees for their service.

This was a mutually beneficial relationship for over 1.5 years. We had known them since 2018, thought they were competent and didn’t think they were degen enough to lose billions and not employ basic risk management.

asserted the CEO.

Also read: Crypto fund Three Arrows Capital (3AC) could die amid liquidation woes.

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He also stated that 8 Blocks’ initial request for fund withdrawal on June 12 was met on time. However, after the market slid deeper, Yuan asked for a second, larger withdrawal and got “ghosted.”

Fast forward to 24 hours ago, our funds monitoring script noticed that ~1m was missing from our accounts with them. We reached out to Kyle L. Davies [3AC co-founder], the Ops team on Telegram about the missing funds- no replies. We tried calling them- they were online and they didn’t pick up

Yuan continued.

Will Three Arrows Capital pay up?

As further research uncovered, 3AC was leveraged long on multiple platforms and was getting margin-called.

However, they allegedly chose to lay low and “ghost” the creditors instead of answering the margin calls. As a result, the platforms had “no choice” but to liquidate their positions, causing the markets to dump further.

Also read: Luna 3.0? Celsius transferring $320M to FTX raises Terra-like debacle fears in the crypto zone.

Yuan commented that Three Arrows did not “speculate” with trader assets like Celsius. But they did use 8 Block’s one million to answer their margin calls.

Losing a bet is one thing, but at least be honorable and not drag others into your bets who have nothing to do with it. Certainly don’t ghost on everyone since potentially, they could’ve helped you.

commented Yuan

Meanwhile, there has been no official word from 3AC about the possibility of the hedge fund going insolvent. Instead, 3AC co-founder Su Zhu made a vague statement about the situation through a Twitter post.

However, the hedge fund’s portfolio included Terra-based tokens, and Three Arrows took a hit when the ecosystem imploded. The controversy around Terra, Celsius, and Tron cast a long shadow on the DeFi market.

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Additionally, the Federal Reserve’s upcoming rate hikes, and the unfavorable conditions on the market, could tank crypto deeper, wreaking havoc in the DeFi sector.

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Lilit Chichyan

Lilit is a Yerevan-based Markets writer, skilled in 3 languages, and interested in writing about the tech world, trading, art, and science. She also has a background in psychology and marketing, which helps deliver the right message to the target audience.

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