Avalanche Distances Itself From Three Arrows Amid Insolvency Fears

Tanvi Singh
June 17, 2022
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Avalanche is a major Etherum competitor

Ethereum competitor Avalanche said on Friday that it has little exposure to beleaguered hedge fund Three Arrows Capital, as the latter faces a potential insolvency. 

The blockchain said in a tweet that Three Arrows never had any control over Avalanche’s treasury funds. 

Avalanche’s comments come as Three Arrows faces the potential liquidation of its positions as the hedge fund failed to meet several margin calls by lenders.

The hedge fund was a major investor in Avalanche in 2021, and likely holds AVAX tokens.

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Three Arrows Capital led an Avalanche funding round

3AC along with Polychain led a $230 million investment in Avalanche last year, that saw the blockchain issue AVAX tokens to Three Arrows in a private sale. 

AVAX, Avalanche’s native token, has slumped in value this week on fears that Three Arrows could dump its stake to cover its positions. The token is down nearly 32% in the past seven days at $16.41. A broader crypto market decline has also contributed to its weakness.

Three Arrows is liquidating its Lido Staked Ethereum (stETH) funds as the market crisis is deepening. It liquidated 15k stETH in one hour earlier this week, and has been repeatedly reducing its exposure to the token.

All the stETH holding in the wallet has been liquidated by 3 Arrows Capital as per the latest update. stETH has plunged by 39.76% in the last 7 days, and is still trading at a sizeable discount to Ethereum.

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Crypto lenders also deny major exposure

Avalanche is not the first one to make such a statement regarding Three Arrows Capital. Crypto lender NEXO had also made it clear that 3AC has no exposure with its digital assets.

Earlier on Friday, BlockFi said it had liquidated a “large client” when they failed to meet their obligations. While reports said that this was likely Three Arrows, BlockFi reassured investors that it was fiscally sound.

The liquidation risks faced by Three Arrows have contributed to the broader downturn in the crypto market in the past weeks.

 

 

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Tanvi is a journalism graduate from Delhi university. She has a keen interest in finance. As a newbie in the journalism world, Tanvi is learning and exploring the field. She plans to be an anchor in the upcoming years. In her free time, you can find her exploring nature & grooving in music and books. She can be reached at [email protected]
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.