Three Arrows Capital withdraws millions of ETH from a DeFi liquidity pool – BeinCrypto

A wallet owned by hedge fund Three Arrows Capital withdrew $33 million in Staked ETH (stETH) from Curve’s liquidity pool.

According etherscan and Nansen, Three Arrows Capital (3AC), which recently filed for bankruptcy, also withdrew 200 bitcoin (BTC), $4 million in Tether (USDT), and $4 million in Wrapped Ethereum (wETH) from Convex , another DeFi platform.

3AC filed for bankruptcy in July after falling victim to the collapse of TerraUSD, Terra Luna’s infamous algorithmic stablecoin. Indeed, the hedge fund had invested $200 million in a $1 billion sale of Luna tokens. Then the funds went to the Luna Foundation Guard, an asset pool whose goal was to keep TerraUSD at par with the US dollar.

When TerraUSD and Luna crashed, 3AC co-founder Kyle Davies believed the hedge fund could absorb the losses. But, it only took a few days for the company to throw in the towel by declaring itself bankrupt.

What prompted Three Arrows Capital to withdraw its funds?

The reasons for 3AC’s withdrawal of cash are unclear. This is because StETH, which is issued by staking pools like Lido Finance in exchange for ETH, can only be converted to ETH six to twelve months after the Ethereum network transitions from proof of work to the proof of stake. Those who do not wish to wait, however, can use Curve, which has a liquidity pool for trading between stETH and ETH and is currently suffering from an imbalance (more stETH than ETH).

By withdrawing its funds from Curve, 3AC may be preparing to borrow ETH against collateral in stETH. This, in order to become eligible for the airdrop of the new token of the Ethereum PoW fork. Otherwise, he would have to wait for The Merge to be able to exchange his stETH for ETH.

After the price of stETH fell against ETH, Three Arrows Capital and Alameda Research deposited stETH in Curve. Thus, if 3AC converts its wETH to ETH, it could become eligible for an airdrop of the new Ethereum PoW fork token.

That said, it could also be that Three Arrows Capital has liquidated its wETH, BTC, and USDT as part of its liquidation proceedings, which are being orchestrated by a court in the British Virgin Islands. In August, a Singapore court granted Teneo, 3AC’s liquidator, access to the company’s financial records to assess the location and availability of remaining funds. These crypto assets, which were previously used to provide liquidity, could become part of the hedge fund’s remaining assets.

A mountain of debt to pay off

In April, Three Arrows Capital had three billion dollars of assets under management. Currently, the hedge fund is being taken to court by some of the biggest calibers in the crypto sphere, including Genesis Global Trading to whom it owes over $2.4 billion. 3AC had also borrowed $687 million from crypto broker Voyager, which also filed for bankruptcy.

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Three Arrows Capital withdraws millions of ETH from a DeFi liquidity pool – BeinCrypto


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