Venture Firm Three Arrows Capital has failed to meet margin calls from it lenders

By: Michael Wilson

June 17, 2022 9:04 AM

Venture firm Three Arrows Capital (3AC), according to a new report has failed to meet margin calls from its lenders, raising the spectre of insolvency after the latest crypto market collapse triggered unforeseen liquidations for the company.

According to a new report from Financial Times, crypto lender BlockFi was among several companies to liquidate some of 3AC’s positions.

BlockFi who was among the firms to liquidate at least some of 3AC’s positions, according to the report. Financial Times reported that the venture capital firm 3AC had borrowed Bitcoin (BTC) from BlockFi but was unable to meet a margin call after the market recent downturn which occurred this week.

Finblox, a platform that allows investors to earn yield on their digital assets based in Hong Kong was affected from the 3AC issue. Finblox stated it was forced into reducing its withdrawal limits on Thursday due to issues arising around the venture firm.

According to various estimates from sources close to the matter, Venture firm 3AC could have possibly incurred $400 million in liquidations across multiple positions. The company was first significantly exposed to the Terra collapse ( originally Luna, now LUNC) and also held large positions in projects such as Solana (SOL) and Avalanche (AVAX).

Su Zhu, 3AC's outspoken co-founder issued a cryptic tweet after rumors about the company's insolvency swirled in recent days. the co-founder said in his tweet " that the company is working with relevant parties to resolve its issues."

This week’s mass liquidations were likely triggered by the collapse of Ether (ETH), which plunged toward $1,000 which could be its lowest point in the last two years. Moreover, rumors have it that the venture firm exposure to synthetic assets, such as the Grayscale Bitcoin Trust (GBTC) and Lido’s Staked ETH (stETH), was the cause of the liquidation events for 3AC.