Three Arrows Capital (3AC) co-founders Su Zhu and Kyle Davies have decided to launch their own memecoin, Three Arrowz Capitel.

The duo previously led a hedge fund that blew up, had its dwindling assets frozen by court order, and still owe billions of dollars to creditors. Authorities in Singapore arrested Zhu last year for failing to comply with court instructions.

Branded under a purposeful misspelling of their failed hedge fund and retweeted from their official social media accounts, the duo are now promoting a trading-focused Telegram channel to go with the newly-minted ERC-20 token.

Unfortunately for their mostly retail audience, up to 84% of its supply was held by insiders as of yesterday afternoon.

• 71.8% is now in a Team & Insider wallet.
• The token also imposes a punishing 1% tax on every buy and sell. The duo claims they will recirculate this tax to help their community swap the token for other ‘bags.’
• Finally, insiders control another eight wallets with generous allocations, bringing their total insider ownership to approximately 84% as of yesterday afternoon.

Read more: 3AC founder Kyle Davies not sorry for his actions, intends to avoid prison

Three Arrowz Capitel trading near a nickel

From its $0.192 all-time high on September 27, the coin has lost over 70% of its value. It now trades near a nickel and the token’s price chart since inception traces a classic pump-and-dump formation.

Only 9.3% of the token’s supply is available for liquidity on Uniswap and non-insider traders own a single-digit percentage. It has also lost over one-fifth of its value in the past 24 hours.

The launch of their new memecoin has raised concerns about Zhu and Davies’ focus. Despite the serious nature of their alleged harm to former investors, they have decided to launch a misspelled memecoin and post brain rot to a Telegram channel.

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Troubled trading platform Voyager says the amount of crypto users can expect to get back depends largely on how much it manages to recover from collapsed hedge fund Three Arrows Capital (3AC).

Voyager previously lent 3AC $650 million in bitcoin and USDC but the Toronto-based company was left holding the bag when the Singapore-based fund declared bankruptcy in June and refused to play ball with liquidators.

As a result, despite pushing 3AC for the funds, Voyager has itself been forced to file for chapter 11 bankruptcy and is undergoing “a voluntary restructuring process.” This, it says will restore access to USD deposits following a fraud prevention process.

However, things aren’t looking so straightforward for customers with crypto deposits still on-platform.

According to a statement released on Monday, in addition to its outstanding claim against 3AC, Voyager holds around $1.3 billion in crypto assets on its platform.

The plan is to redistribute these funds with customers receiving a combination of:

• Pro-rata share of crypto
• Pro-rata share of proceeds from the 3AC recovery
• Pro-rata share of common shares in the newly reorganized Company
• Pro-rata share of existing Voyager tokens

Voyager adds that customers will be able to tailor the proportion of crypto and equity they receive, depending on certain maximum thresholds.

Read more: Three Arrows Capital liquidated by multiple lenders after ghosting

But even with this plan in place customers still have no idea exactly how much they’ll be able to claim back.

“At this stage, we are proposing that customers will receive their crypto as described above,” reads Voyager’s statement.

“However,” it adds, “the exact numbers will depend on what happens in the restructuring process and the recovery of 3AC assets,” (our emphasis).

If Voyager wants its money it has to find 3AC founders first

Voyager has been chasing 3AC for the outstanding millions for some time. According to Forbes, the firm wanted $25 million in USDC by June 24 with the rest of the outstanding debt to follow by June 27. However, this hasn’t happened yet.

And the prospects of getting back the funds don’t look great so far. Three Arrows’ issue with Voyager is just one of a raft of liquidations and unpaid debts that have dogged the company since it went under.

To make things worse, according to recent reports, founders Su Zhu and Kyle Davies are nowhere to be found and when officials tried to track them down at the firm’s Singapore office, all they found were locked doors and piles of unopened mail.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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Under-fire Three Arrows Capital (3AC) chief Su Zhu is reportedly looking to sell the house he purchased in one of Singapore’s most exclusive neighborhoods just days after the crypto hedge fund he founded in 2012 was liquidated. 

According to a number of well-known Twitter users, including @DoveyWan, @WuBlockchain, and infamous Terra whistleblower @FatManTerra, Zhu is looking to offload the property he bought in December last year for a reported $35 million.

The sale comes as a British Virgin Islands judge on Monday made the decision to liquidate 3AC after the company failed to put up extra funds to cover a raft of bad crypto bets. It held substantial amounts of poor-performing tokens including Solana (SOL), Avalanche (AVAX), Axie Infinity (AXS), and the virtually worthless LUNA.

According to documents published by CoinDesk, the house, situated in the uber-swanky Yarwood Avenue, is a 32-year-old 31,000-square-foot “Good Class Bungalow” (basically a decent-sized house) and was transferred to a trust for the couple’s three-year-old child earlier this year.

CoinDesk also details a number of other luxury properties owned by Zhu and his wife, including a detached house worth $20 million and another home worth nearly $4.5 million.

Zhu allegedly wants the money sent to Dubai

According to Terra insider @FatManTerram, Zhu has requested that payment for the house be transferred to an account in Dubai. The prolific tweeter also goes as far as to speculate that Zhu has no intention of paying off creditors with any funds raised, citing by way of proof:

• Discussions with the property agent,
• Zhu’s attempts to get around the Singapore banking system and liquidation process,
• Sources close to the matter.

Read more: 3AC targeted by Singapore watchdog, says firm handled too much cash

It’s important to note that the sale has not yet appeared on Singapore’s leading real estate sales websites and has not been confirmed by Zhu or any agents acting on his behalf.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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Three Arrows Capital is the subject of a probe by the Monetary Authority of Singapore (MAS) for breaking its agreed $180 million limit on assets under management (AUM).

In a statement issued on Thursday, the MAS also pulled up Three Arrows for providing false or misleading information and failing to update the agency on changes to its directors’ shareholdings.

The MAS stated Three Arrows obtained permission in 2013 to handle no more than S$250 million ($180 million) in AUM. However, between July and September 2020 and November 2020 and August 2021, it claims the company exceeded these limits.

Founded in 2012, Three Arrows was once a $10 billion crypto hedge fund but on Monday, a judge in the British Virgin Islands, where the firm was incorporated, ordered its liquidation.

The fund’s managers made big bets on LUNA, the backing token of the failed, so-called “algorithmic” stablecoin, TerraUST (today, classic LUNA and UST are worth almost $0).

The fund also held significant bags of poor-performing altcoins: Avalanche (AVAX), Solana (SOL), and Axie Infinity (AXS), according to Bloomberg. Year to date, all three tokens have lost at least 80% of their value.

Read more: Here’s why Ethereum 2 staking is risky and increases centralization

Moreover, Three Arrows owned 5% (38,888,888 units) of Grayscale’s Bitcoin Trust (GBTC) as of December 31, 2020. Year to date, GBTC is down -61%. Worse, Three Arrows had exposure to Ethereum 2 and Lido’s liquid staking token, stETH.

The British Virgin Islands court has appointed Teneo as liquidator and Three Arrows Capital will be dissolved. The High Court’s rationale was $660 million worth of debt default payable to Voyager Digital.

Teneo will moderate discussions from potential suitors or distressed asset buyers. Three Arrows still holds some altcoins and equity in several crypto companies.

Read more: Three Arrows Capital liquidated by multiple lenders after ghosting

The rise and fall of Three Arrows Capital

In 2012, Kyle Davies and Zhu Su co-founded their hedge fund which, while incorporated in the British Virgin Islands, moved offices several times and most recently operated from Dubai.

Before its collapse, the Financial Times cited rumors that its AUM had fallen from $10 billion to approximately $4 billion. Many people thought that the hedge fund was comprised mostly of Davies and Su’s personal assets.

Earlier this month, Voyager Digital issued a Notice of Default to Three Arrows. Voyager claims it issued loans worth hundreds of millions of dollars to the hedge fund. US-based Genesis and BlockFi also claim to have liquidated their positions with Three Arrows before the fund’s collapse.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

Edit 18:33 UTC, Jun 30: Corrected date in paragraph seven.

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Hedge funds guided by automated trading algorithms are winning where humans are losing as the crypto market crash results in a trillion-dollar tumble, reports Financial Times.

Computers execute automated trades for quantitative hedge funds (or “quant” funds), relying on math and statistics to make investment decisions, largely replacing human analysis. For former Lehman Brothers and Morgan Stanley trader Jay Janer, this type of trading has proved pretty profitable. 

Janer now runs the Cayman Islands-based KPTL Arbitrage Management whose Appi fund is currently up 20% for the year, amid the volitile market conditions. For example, while most LUNA holders lost out during Terra’s recent crisis, Janer’s fund cashed in on the collapse. 

In May, the price of Terraform Lab’s native token LUNA and stablecoin TerraUST (UST) all but vanished after the stablecoin lost its dollar peg, helping to spark the current crypto market crash. The computer-controlled fund exploited Terra’s downward spiral for profit. It had also placed short positions on Bitcoin and Ethereum before targeting smaller tokens.

“We’ve made good money from Luna…The model followed what was happening in the market. It started crashing and the model got in,” Janer told FT.

“It’s wonderful to have a market that moves so much… I don’t know of any other market that moves so much.”

However, movements in cryptocurrency pricing has been predominantly downwards. What was a more than $3 trillion market now strains to exceed the $900 billion level.

Elsewhere, Leda Braga’s Systematica Investments is also profiting from Bitcoin’s sustained losses. Its nearly $7 billion Alternative Markets fund is enjoying profits of close to 16% for the year. London hedge fund Florin Court is also up nearly 15%, also making use of quantitative strategies which employ computer models to make investment decisions.

Automated hedge funds up while DeFi falls victim to crypto market crash 

The ongoing turmoil appears to be having an outsized effect on the DeFi lending space. What was once DeFi summer is now becoming a season of insolvency.

This week, DeFi lenders Voyager and BlockFi received emergency bailouts from leading crypto exchange FTX, to the tune of $500 million and $250 million respectively. Although the move, heralded by FTX chief exec Sam Bankman-Fried, could be more self-preservation than selflessness as the exchange tries to limit the damage to its own business. 

Read more: Better call Sam: FTX bails out BlockFi and Voyager despite years of losses

Beyond DeFi an unwelcome margin call helped to push positions held by Singapore-based venture capital fund Three Arrows Capital into liquidation. The fund reportedly used shares in Grayscale Bitcoin Trust as collateral for loans and liquidations across several exchanges resulted in at least $6 million of outstanding debt.

Ultimately, it is often retail investors who end up being most impacted by crypto market crashes. Many were convinced to invest in projects like the Terra ecosystem by industry influencers like Raoul Pal, who famously suggested that LUNA was a solid investment. In a show of current investor sentiment, massive crypto exchange Binance is now embroiled in legal proceedings on behalf of disgruntled customers who claim the exchange explicitly marketed TerraUST as “safe.”

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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A slew of crypto companies including Terraform Labs, Three Arrows Capital, and Jump Crypto, along with Terra chief Do Kwon are the targets of a recently filed class-action lawsuit that alleges they misled investors, lied about their tokens’ stability, and broke federal securities laws.

The suit, filed in California by Illinois-based investor Nick Patterson, alleges the defendants, which also include DeFinance Capital, Republic Capital, and Terra’s head of research Nicholas Platias, conned investors by failing to register Terra’s LUNA and UST tokens as securities with the SEC. The suit also claims:

• The defendants made a series of misleading and grandiose statements regarding UST and LUNA to lure investors into purchasing at inflated rates.
• Terraform Labs gave a false impression of UST and LUNA’s stability — these claims are backed up by charts which show the tokens plunging 91% and 99.7% respectively last month.
• A number of the defendants, including Jump, Tribe Capital, DeFinance, and Three Arrows worked with TFL as part of its so-called Luna Foundation Guard (LFG) to mislead investors into believing that its reserves were sufficient to “defend the peg” and maintain interest payments.

The Luna Foundation Guard is made up of six venture capital firms and was intended to build up and provide reserves to get the Terra ecosystem through particularly tough times and prevent a de-pegging.

But despite this, LUNA and UST spiraled last month, wiping billions from crypto markets.

Read more: Crypto investors sue Binance US over marketing Terra’s UST as ‘safe’

Mr. Patterson is seeking a jury trial and has called for the award of “all actual, general, special, incidental, statutory, rescission, punitive, and consequential damages” to which he and his fellow investors are entitled.

Now Terra employees are in the spotlight

The problems keep coming for Do Kwon and Terra.

Besides this most recent lawsuit, the company has reportedly been fined nearly $80 million in South Korea for tax evasion, and now local authorities have barred all current and former Terra employees from leaving the country.

According to South Korean outlet JTBC News, Terra workers may be restricted from traveling abroad as authorities gear up for further investigations into the ecosystem’s collapse.

Some of those affected didn’t even know they’d had their travel rights restricted until they attempted to leave the country.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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Singapore-based hedge fund Three Arrows Capital (3AC) has become the latest victim of credit lenders’ belt-tightening after it failed to meet margin calls and saw some of its positions liquidated last weekend.

The fall in crypto prices across the board has seen lenders dramatically reduce the amount of credit they’re willing to offer, and the famously bullish company’s failure to provide an injection of extra funds means it’s now struggling to cover its losses.

Among the lenders reported to have liquidated 3AC assets is US-based BlockFi. As reported by the Financial Times (FT), according to sources close to the matter, the company “reduced its exposure by taking collateral the fund had put down to back its borrowing.”

Three Arrows reportedly made a “strategic investment” in BlockFi two years ago, borrowing bitcoin from the lender but exited 12 months later.

It remains unclear what collateral 3AC posted for its loans, however, rumors online suggest that shares in Grayscale Bitcoin Trust (GBTC) are in fact what it’s been borrowing against.

It is also reported to have seen positions liquidated by exchanges Deribit, FTX, and BitMEX, and reportedly owes the latter somewhere in the region of $6 million.

In response to these most recent claims, 3AC co-founder Su Zhu said via Twitter: “We are in the process of communicating with relevant parties and fully committed to working this out.”

On Thursday, BlockFi CEO Zac Prince also posted a tweet believed to refer directly to its action against 3AC.

Read more: BlockFi customers concerned it may have lent too much bitcoin to 3AC

There’s ‘bullish’ then there’s ‘Three Arrows bullish’

Three Arrows and its co-founders Zhu and Kyle Davies have traditionally been incredibly bullish on crypto. As recently as last April, Zhu was touting bitcoin as potentially “one of the key reserve currencies of people and nations,” and before that hyping Dogecoin due to it being easy to understand for “blue-collar traders.”

However, this ‘go big or go home’ approach has this time seemingly left the firm high and dry.

“They were really big and really active. They went into some enormous positions,” Wave Financial chief David Siemer told FT.

The fund has also put its faith in recent months in a number of tokens that have faired terribly.

These have, as detailed by FT,  included Solana, Axie Infinity, Avalanche, and Luna, which went down the tubes in May, taking much of the market with it.

Finally, 3AC was one of the major investors in Grayscale Bitcoin Trust, last year disclosing ownership of more than 38 million shares.

Unfortunately with GBTC currently trading at a more than 30% discount to bitcoin, if it still holds all these shares, the position will have lost around $785 million to date.

It remains to be seen if 3AC will be able to ride out the latest waves caused by the crashing crypto market, but as Zhu himself so wisely said back in November last year, “Those who do not manage their risk will have the market manage it for them.”

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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BlockFi customers are concerned their bitcoin positions could be substantially impaired due to its ties with hedge fund Three Arrows Capital (3AC). Rumors of massive liquidations are fueling fears of complete insolvency at 3AC — while rumors say BlockFi has lent enormous sums of bitcoin to the firm.

The situation at 3AC is rapidly deteriorating. On top of its concerning portfolio, one of its clients has accused the fund managers of embezzlement. 8BlocksCapital claims 3AC took $1 million of its funds without explanation to answer its margin calls.

At its peak, Three Arrows Capital managed over $10 billion according to blockchain analytics firm Nansen. Today, it remains unclear if the hedge fund will keep its head above water.

3AC’s troubled investments include BlockFi, GBTC, and stETH

At the end of last year, 3AC filed a Form 13-F with the SEC disclosing ownership of over 38 million shares of Grayscale Bitcoin Trust (GBTC). If it still holds those shares, it has lost $785 million in that position year-to-date. There’s also a rumor that 3AC lost $400 million more this month in a forced liquidation.

The hedge fund is also a major stETH token holder. The ostensibly 1:1 ETH pegged derivative by Lido has broken its peg and trades at a 6% discount.

3AC is also a major shareholder in BlockFi, which just laid off one-fifth of its staff and reduced its valuation -80% from $5 to $1 billion. BlockFi has a similar business model to Celsius which halted withdrawals to avoid its own potential insolvency.

Lots of 3AC denials by executives at BlockFi and Tether

Tether denies financial ties with 3AC. Although Tether was an equity owner in Celsius, it now claims to have “liquidated without losses” all of its exposure to Celsius. Moreover, it claims to have “no exposure to 3AC.”

However, BlockFi lent bitcoin to Three Arrows Capital. When GBTC was trading at a premium to its Net Asset Value (NAV), 3AC earned profits arbitraging this premium by depositing bitcoin directly with Grayscale and waiting a few months to vest trust units of GBTC. Now that GBTC trades at a -29% discount to NAV, 3AC’s GBTC arbitrage profitability has ended.

Worse, BlockFi is rumored to be a sizable creditor to 3AC. If 3AC becomes insolvent and enters bankruptcy or legal proceedings, BlockFi might have to wait months or years to retrieve the reportedly large sums of bitcoin it loaned to the hedge fund from a court-appointed liquidator ⏤ if any bitcoin remain.

BlockFi has not confirmed the extent of its financial dealings with the crypto hedge fund. It is unknown exactly how many bitcoin loans are currently outstanding between BlockFi and 3AC. The company maintains a policy of anonymity regarding client dealings.

Read more: Disgruntled BlockFi users push class-action after record SEC settlement

Grayscale’s Barry Silbert has not commented on BlockFi nor 3AC this week.

A substantial amount of the bitcoin that customers deposited at BlockFi was directed to GBTC or 3AC. As a result, a large number of BlockFi’s bitcoin are illiquid.

As insolvency looms over Three Arrows Capital ⏤ and GBTC’s premium-to-NAV has deteriorated into a discount-to-NAV ⏤ BlockFi customers fear their bitcoin positions could be substantially impaired.

BlockFi has already lowered its asking valuation -80%. If it needs to raise more capital to meet cash obligations, or if 3AC were to file for bankruptcy, how much lower can BlockFi’s valuation go?

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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Rumors are swirling about the possible insolvency of Three Arrows Capital. Once a major crypto hedge fund managing an estimated $10 billion in assets, it’s now “in the process of communicating with relevant parties and fully committed to working this out,” according to a vague tweet by co-founder Zhu Su on Wednesday.

Three Arrows Capital was a significant investor in the now-collapsed Terra LUNA ecosystem last month. It owned large amounts of LUNA ⏤ now nearly worthless. It also had financial dealings with Celsius, which paused withdrawals on Monday to avoid its own possible insolvency.

Three Arrows was also identified as a significant customer of controversial ‘stablecoin’ Tether, which has a history of de-pegging from the US dollar. Protos found the Bitfinex subsidiary has sent the hedge fund at least $674 million in USDT directly from Tether’s treasuries. The total amount handled is far more.

Three Arrows Capital is not responding to media inquiries.

The hedge fund was also a major participant in Ethereum 2 liquid staking schemes. As explained by Protos, Ethereum 2 is risky, leveraged, and centralized. Due to the financial incentive to stake ETH with a liquid staking service provider, ETH derivatives risk destabilizing Ethereum-based financial contracts.

Read more: Raoul Pal doesn’t want people to be angry after he appeared to hype Terra

Three Arrows Capital’s exposure to Ethereum 2 is especially risky

Ethereum 2’s largest liquid staking service provider, Lido, issues a supposedly ETH-pegged token, stETH. Three Arrows Capital had significant exposure to this peg, which has now broken by -5%. If this breaks down further, it could cause liquidations across decentralized finance (DeFi) and further impair Three Arrows Capital.

On June 10, co-founder Zhu Su shared a reassuring tweet by early Ethereum investor Konstantin Lomashuk. He said that “stETH is working exactly as it should stETH issued by Lido is backed 1 to 1 ETH.”

Just two days later, on June 13 at 9:45pm New York time, the stETH-ETH peg traded as low as 0.91 to 1.

At press time, one stETH was worth just 0.942 ETH. The two assets are supposed to be equally interchangeable. Su’s fellow co-founder, Kyle Davies, has not commented publicly for six days.

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

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