- Three arrows capital (3AC) liquidates a wallet with staked Ethereum (stETH).
- Staked Ethereum trades below $1,000 as intense sell-offs continue.
Crypto hedge fund, three arrows capital, is close to being insolvent. Recently, it started selling its Ethereum and stETH holdings to pay off its outstanding loans and debts. This action by the crypto hedge fund will likely affect the crypto market negatively. There will likely be billion-dollar worth of liquidation. Thus, leading to another crypto market crash.
Three arrows capital dumps more stETH
Earlier on Thursday, 3AC dumped 5,500 stETH from one of its wallet addresses. There was still 14,118 stETH left in the wallet following that transaction. However, the crypto hedge fund swapped the stETH balance in this wallet later in the day.
The first transaction was worth 6.1M USDT, while the second was worth 13.5M USDT. Etherscan data shows that the fund sold the stETH balance in two transactions. In the first transaction, 3AC dumped 7,000 stETH, while it dumped 7,118 stETH in the second transaction.
Yesterday’s stETH dumps weren’t the first by 3AC. The fund has been selling huge amounts of its stETH. Various analytics show that 3AC’s stETH dump is now larger than the Celsius network.
Why 3AC is selling its crypto holdings
Over the last two months, 3AC has been selling off massive amounts of its stETH holdings from every account and seed round address. The crypto hedge fund has also been doing likewise to its Ethereum holdings. Also, multiple reports confirm that some 3AC-related firms are having operational issues.
Hence, it is likely that 3AC may sell off such companies soon. It is no wonder some firms, such as BlockFi, have started reducing their holdings in 3AC. The 3AC volatility has caused Finblox (one of the fund’s CeFi firms) to pause reward distributions.
Insolvency for 3AC could be a huge blow for the crypto industry. The fund manages more than $18b worth of digital assets. If the 3AC team can’t find other means to solve its financial issues, it would likely dump its other crypto holdings.
3AC has sizeable holdings of Bitcoin, Solana, Kusama, Avalanche, and Polkadot. Dune analytics data showed that 3AC’s portfolio of about $372.27M has dropped to about $139.12M in the last 24 hours.
The data also showed that 3AC’s USDC holdings are worth $166M, while its serum holdings are worth nearly $46M. 3AC had huge investments in the recently crashed terra network. Hence, it is facing huge capital loss following the crash of the LUNA and UST tokens.
The fund has yet to release any official statement regarding its insolvency issues. Instead, the fund’s founder, Su Zhu, only said, “we are discussing with relevant stakeholders. We remain committed to getting the company out of this issue.”
The price of Lido stETH drops again
With crypto companies swapping their stETH continuously, stETH’s price dropped again on Friday morning. Our data shows that lido staked ETH is down 1.47 percent in the last 24 hours and trades at $1,035.29. Hence, the stETH-eth ratio also reduced within the same period. It is now 0.93.
