Three Arrows Capital is still facing a credit crunch exacerbated by the continued pressure on cryptocurrency prices. "The Terra-Luna situation caught us very much off guard," 3AC co-founder Davies told the Wall Street Journal in an interview earlier this month. Then the so-called algorithmic stablecoin terraUSD and its sister token luna collapsed.ģAC had exposure to Luna and suffered losses. 3AC had borrowed from BlockFi but was unable to meet the margin call.Ī margin call is a situation in which an investor has to commit more funds to avoid losses on a trade made with borrowed cash.
There was no follow-up about what the specific issues were.īut the Financial Times reported after the tweet that U.S.-based crypto lenders BlockFi and Genesis liquidated some of 3AC's positions, citing people familiar with the matter. Three Arrow Capital's problems appeared to begin earlier this month after Zhu tweeted a rather cryptic message that the company is "in the process of communicating with relevant parties" and is "fully committed to working this out." The onset of a new so-called "crypto winter" has hurt digital currency projects and companies across the board. But in May this year, as the crypto market began its meltdown, Zhu said on Twitter that his "supercycle price thesis was regrettably wrong." He said last year the world's largest cryptocurrency could be worth $2.5 million per coin. Zhu is known for his incredibly bullish view of bitcoin. Three Arrows Capital was established in 2012 by Zhu Su and Kyle Davies.
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