The insolvency crisis of Singapore-based cryptocurrency hedge fund Three Arrows Capital continues to rage. The head of trading at Hong Kong-based cryptocurrency hedge fund 8 Blocks Capital wrote an article today about the ins and outs of the fund’s cooperation with Three Arrows Capital, accusing Three Arrows Capital of recent misappropriation of the fund’s $1 million in Arrow Capital’s trading account for margin calls, with no response so far. (Recap:Three Arrows Capital accused of “misappropriation of client assets”?One Capital: Take $1 million for no reason) (background supplement:Opinion | If Celsius and Three Arrows collapse, what will it mean for the crypto industry?)
fragrantDanny Yuan, head of trading at 8 Blocks Capital, a Hong Kong-based cryptocurrency hedge fund, posted a series of tweets today stating that, starting in November 2020, 8 Blocks Capital signed an agreement with Three Arrows Capital to pay Three Arrows Capital to use The trading account of Three Arrows Capital, the purpose is to reduce the trading rate.
Danny Yuan explained:
As a Delta-neutral market maker, we are very sensitive to transaction rates. 1 BIP of $100 million is $10,000 when you’re trading 9-figure dollar value every day, and if you’re paying that much every day, it quickly adds a lot of burden.
Therefore, our agreement with Three Arrows Capital is: we can withdraw at any time, 100% of the profit and loss (PNL) belongs to us, and Three Arrows Capital will never transfer our funds without permission (increasing the risk of our positions being liquidated) , and in return we pay them for the service.
4) So our agreement with them was: we withdraw whenever we want. 100% of the PNL belongs to us. They are never to move our funds without permission (increases the risk of our positions getting liquidated) and in return, we pay them fees for their service.
— Danny (@Danny8BC) June 16, 2022
Danny Yuan mentioned that this is a mutually beneficial relationship for more than 1.5 years. 8 Blocks Capital has known Three Arrows Capital since 2018, and believes that Three Arrows Capital is capable. It does not think that Three Arrows Capital has fallen enough to lose billions of dollars. Perform basic risk management.
Charged with $1 million misappropriation for no reason
However, Danny Yuan pointed out that something unusual started to happen this month:
On June 12, as the market fell, we needed to withdraw some funds from our account for positions on other exchanges, so asked the Three Arrows Capital Operations team to let us withdraw.
On June 13th, as the decline continued, we asked for a larger withdrawal, but no response, we didn’t think much of it at the time, after a while the market stabilized and we no longer needed funds, we thought Say, maybe they’re just busy.
7) On June 13th, with the continuation of the drop, we asked for a bigger withdrawal. There was no reply but we didn’t think much of it at the time. After a while, the market stablized so we no longer needed the funds. We thought maybe they were just busy.
— Danny (@Danny8BC) June 16, 2022
Danny Yuan made further accusations, and then something even more bizarre happened:
Fast forward to 24 hours ago, our funding monitoring script noticed that our account at Three Arrows was missing about $1 million, and we reached out to Three Arrows co-founder Kyle Davies and the operations team on Telegram to ask about Lost funds thing – did not receive a reply. We tried calling them – they were online but they didn’t answer.
Then our traders noticed that there were some rumors circulating on Twitter about the bankruptcy of Three Arrows Capital. Since we were directly involved, we felt compelled to tell the world what was going on and measure the extent to which the Three Arrows event spread.
9) Then our traders noticed that there were a few rumors circulating on Twitter speculating on 3AC’s insolvency. Since we were directly involved, we felt the need to tell the world about what had occurred and gauge the extent of the 3AC contagion.
— Danny (@Danny8BC) June 16, 2022
Call for Freeze Three Arrows Capital Assets
Referring to the recent rumors that Three Arrows Capital was liquidated by institutions, Danny Yuan revealed that what 8 Blocks Capital learned was that Three Arrows Capital conducted leveraged transactions everywhere and was issued a margin call, but Three Arrows Capital did not target the additional Margin calls responded, but instead left every platform in trouble, with platforms having no choice but to liquidate, leading to further market sell-offs.
Further reading:Suspected Three Arrows Capital address was liquidated by Compound to liquidate 11,000 ETH; Aave’s 210,000 ETH is in jeopardy
Further reading:Three Arrows Capital’s “400 Million Magnesium Loan” Has Been Liquidated by Institutions!Selling ETH to save Aave’s $264 million in assets
However, Danny Yuan pointed out that Three Arrows Capital still has assets on many platforms. Therefore, he called on these platforms to freeze the assets of Three Arrows Capital, so that after legal proceedings, people who are owed money by Three Arrows Capital, be repaid with funds in the future.
Danny Yuan finally criticized Three Arrows Capital again:
For the most part, Three Arrows didn’t use clients’ money to speculate like Celsius (which was probably what we were talking about when dealing with them one day in 2019), but Three Arrows did misappropriate ours Funds (about $1 million) to cover the margin calls they were issued.
Losing a bet is one thing, but at least be decent, don’t pull other people into your bet that have nothing to do with the bet, don’t be sneaky about everyone because they might help you.
14) Losing a bet is one thing, but at least be honorable and not drag others into your bets who have nothing to do with it. Certainly don’t ghost on everyone since potentially, they could’ve helped you.
— Danny (@Danny8BC) June 16, 2022
📍Related reports📍
Three Arrows Capital’s “400 Million Magnesium Loan” Has Been Liquidated by Institutions!Selling ETH to save Aave’s $264 million in assets
The largest bookmaker in the market “Three Arrows Capital is going bankrupt? A roundup of rumors and rumors: clearing stETH, liquidity crisis…
Three Arrows Capital accused of “misappropriation of client assets”?One Capital: Take $1 million for no reason
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