The crypto market collapse is a seasonal gift with different beneficiaries. Celsius was the latest billion-dollar crypto company to fall victim to the market turmoil by declaring bankruptcy. Three Arrows Capital (3AC) may be the new one to follow suit.
Many startups bear the brunt of the market correction, followed by massive job cuts and fluctuating prices. This is what many are referring to as “Crypto winter.” It is cold out there, and the life-blood of the industry has stopped flowing.
Is 3AC Going Bankrupt?
Three Arrows Capital is one of Singapore’s leading cryptocurrency hedge fund firms. In less than a year after its establishment, 3AC saw an unprecedented rise amid the golden period in the crypto industry last year.
The company has backed multiple projects on some crypto networks like Terra, Solana, and Avalanche. It is also one of the largest crypto firms active in the NFT space. Last year, 3AC was reported to have invested $100 million in the most popular digital art.
However, the round report revealed that the firm is undergoing the toughest period.
Meanwhile, as a DeFi service provider, 3AC is coming to terms with the other side of the ecosystem. It is a double-edged sword industry, providing a transparent platform to transact transparently with no hiding place for illicit activities.
This, according to a crypto trader @MoonOverlord, is what has happened to 3AC. The crypto trader posted a screenshot on his Twitter handle from a blockchain data firm, Nansen.
Based on the image posted, a crypto wallet belonging to 3AC conducted five huge transactions last week involving 30,009 ETH. The said transaction is worth $36.9 million.
3AC in trouble? rumors swirling
– Kyle and Zhu havent tweeted or liked anything in days
– Zhu took every coin and # tag out of his bio
– Zhu deleted his instagram
– an hour ago they dumped 30k stETH and reduced all AAVE positions— moon (@MoonOverlord) June 14, 2022
The Twitter post has generated massive reactions, indicating that the firm, 3AC, has done something illegal. However, some keen observers believe that 3AC made the transactions to avoid going into liquidation as the market continues to bleed.
Meanwhile, one of the main reasons for the mass panic is that another large DeFi service provider, Celsius Network, has frozen all withdrawals due to liquidity issues.
Is stETH De-Peg a Factor in the Latest Meltdown?
The delay of the Ethereum difficulty bomb led to a fall in trust of the Lido finance stETH. The Lido token is a staked token developed with the promise that it would equal ETH in value.
Meanwhile, many see it as just a little factor in the grand scheme that has thrown the crypto industry into disarray.
The general sentiment is that the Terra network is the crucial factor that caused the crypto market to crash. The market is in a bearish period with no end in sight. This caused stETH to de-peg from ETH, leading to a massive stETH sell-off.
Even though the token is recovering its value with Ethereum, the Celsius incident has made many wary. There is a drop in confidence in the market; many are not willing to take the risk of losing their assets.