Setting foot into this week has been an entire collapse of the crypto world as the market continues to plunge, leaving many in fear, however, the week seems to be worse for the Three Arrows Capital as the firm faces potential insolvency after being liquidated by its lenders.
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The plunge in the crypto market continues as Bitcoin is currently trading a little above $20k and Ethereum is tumbling towards $1k. As a result of this market trend, the Three Arrows Capital(3AC) future is seeming to be uncertain, according to different analytics information shared on Twitter by various accounts.
However, more speculations continue after the 3AC founder, Zhu Su tweeted that the firm is “communicating with relevant parties” and committed to “working this out.”
According to on-chain data, an address that is said to belong to the 3AC was seen selling millions of Lido Staked Ethereum (stETH) through multiple transactions to keep its positions from being liquidated.
Its exposure to the Terra crash, Celsius and stETH has also raised questions over the state of its finances.
In a tweet by a crypto commentator shown below, the firm will face $264 million liquidations on Aave should the Ethereum price fall close to $1,014. As of writing this, Ethereum is currently trading at $1,038.
In addition to Zhu’s comments, the block rumored that the firm is in communication with its lenders in order to gain more liquidity and wave the liquidation.
ETH is already struggling against selling pressure caused by the stETH depeging, an event that has spread to several DeFi platforms and could cause a chain of liquidations across the market.
Celsius will also see some of its positions liquidated in the event of ETH falling below $1000- a scenario that may play out after the Fed rate hike today.
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