Better known as 3AC, 3 Arrows Capital was until recently one of the major crypto-investment funds. But in recent days, reports of its financial health have raised fears of bankruptcy.
After the collapse of Terra blockchain projects and the freezing of withdrawals on the platform of strike Celsius, it’s 3 Arrows Capital’s turn to experience a very bad patch, according to several observers. But since mid-June, more and more analysts are reporting problems in 3AC’s accounts. Some do not hesitate to use the term insolvency – and in an interview with the Wall Street Journal, the founder confirmed the company’s poor health.
3 Arrows Capital, abbreviated 3AC, is not just any platform. It is one of the most important investment and speculation funds in the cryptocurrency sector: the company manages a capital of more than $ 3 billion. This large fund means that 3AC has positions in many crypto companies and has invested in the most important blockchains. And if the platform ever declares bankruptcy, the consequences could be catastrophic for much of the ecosystem.
What’s happening to 3 Arrows Capital?
To simplify, the A3C is a hedge fund. It is more or less the same as an investment fund, except that these hedge funds (also called hedge funds) take shares in more risky sectors to get a better return and use loans to guarantee them. They are therefore considered risky investments.
The situation that A3C is in today is quite complicated and it is related to the decrease in the value of several tokens, including stETH. But it had also invested $ 200 million in the Luna, Terra project, whose value collapsed in a matter of days – and which is now worthless. Between the Luna debacle and the fall in the price of cryptocurrencies, some specialists believe that 3AC would no longer have adequate guarantees for the loans it took out. If so, the company may default.
Analysts reached these conclusions by looking at the transactions performed on wallets allegedly belonging to 3AC. For a few days, the company and its founders were tucked away in silence. But in an interview with the Wall Street Journal on June 17, they finally confirmed 3AC’s poor situation.
The company is ” examines all possibilities “to avoid non-payment,” including the sale of their assets and the acquisition of another company “, explains the WSJ.” The fund hopes to reach an agreement with its creditors, to have more time to find a solution. ”
If the company were to default, the consequences for the crypto world would be catastrophic. In addition to managing the funds of many companies and individuals who may lose some of their money, 3AC has also borrowed large sums to finance these investments.
If the platform defaults and fails to repay its loans, the domino effect will be felt throughout the crypto world. The first company to suffer from the fall of 3AC would be the Celsius betting platform, which gave it a loan, and who themselves experience significant liquidity problems. Other lenders would also be concerned, as would the projects in which 3AC has invested.
While waiting for confirmation of the situation from Zhu Su or of the company, it is therefore everyone in the crypto who is holding their breath – and hoping to escape the worst.