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Three Arrows Capital (3AC), one of the largest crypto venture capital firms, has reportedly stopped communicating with multiple partners for which it manages money. This comes amid growing rumors that the company is insolvent, hastily paying off debts similar to Celsius.
Silence From 3AC
The first partner to speak out was Danny Yuan, Head of Trading at crypto market maker 8 Blocks Capital. In a Twitter thread on Wednesday, he explained that 3AC had breached an agreement with his firm to not move the capital from one of their accounts.
When asking for funds on June 13th amid the declining market, the firm received no response.
“Our funds monitoring script noticed that ~1m was missing from our accounts with them,” said Yuan. “We reached out to Kyle Davies, the Ops team on Telegram about the missing funds- no replies. We tried calling them- they were online and they didn’t pick up.”
Rumors of insolvency at 3AC have risen amid the recent collapse of the crypto markets. Celsius, a crypto lending platform, is already facing liquidity trouble as it struggles to defend loans at risk of liquidation. The company has been forced to prevent customer withdrawals until the issue is resolved.
On Tuesday, 3AC co-founder Zhu Su confirmed that his fund was in some type of trouble as well. “We are in the process of communicating with relevant parties and fully committed to working this out.” he tweeted.
Yet communication appears not to be taking place. Crypto market analyst “The Defi Edge,” claims to have spoken with other partner protocols partnered of 3AC, that have now been ghosted. The anonymous sources say they agreed to have 3AC manage their treasuries to earn approximately 8% APR.
Unfortunately, they reportedly cannot use on-chain data to confirm the safety of their funds, given its mixture with other investments.
Many also suspect 3AC to be responsible for dumping the market with stETH, which represents ETH trading on the Beacon chain. The trader “moon” on Twitter states that most of it is being used to pay back debts and outstanding borrows. Furthermore, CeFi company Finblox is now feeling Ripple effects from worries about 3AC’s solvency. Lastly, the company, in which 3AC is an investor, stated today that it needs to reduce its withdrawal limits for its customers.