Breaking: Three Arrows Accused Of Misappropriating Customer Funds
Embattled crypto hedge fund Three Arrows Capital faces allegations of using customer funds to meet margin calls on its positions.
Danny Yuan, the head of crypto trading firm 8Blocks Capital, alleged that Three Arrows had used about $1 million of 8Blocks’ funds to answer its margin call. 8Blocks had entered into an agreement with the hedge fund in 2020 to use the latter’s trading accounts.
The allegations come as Three Arrow faces liquidations on multiple fronts by its debtors, amid a sharp decline in the crypto market.
The firm has reportedly already seen some of its positions closed, which has also to some extent caused a decline in the crypto market, especially Ethereum prices.
Three Arrows allegedly ghosted customers, debtors
8Blocks’ Yuan alleged in a Twitter thread that the firm had initially requested Three Arrows for a withdrawal of its funds earlier this week, which was ignored.
The firm then noticed that about $1 million of its funds with Three Arrows was missing. 8Blocks’ attempts to reach Three Arrows were ignored again.
Yuan further alleges that Three Arrows had not answered margin calls from several of its debtors, which caused them to liquidate the hedge fund’s positions. This in turn caused a dump in the broader market.
The 8Blocks head is now calling for legal proceedings against the hedge fund. To this end, he called on other crypto platforms holding Three Arrows’ assets to freeze their positions, so that they can be recovered by lenders through legal action.
Three Arrows founder Zhu Su said this week that the firm is “communicating with relevant parties” over the recent downturn. But Su has also distanced himself from Ethereum on Twitter.
Crypto markets stabilize, so no liquidations for now
Crypto markets have now stabilized somewhat from recent losses, reducing the threat of a broader liquidation for Three Arrows.
But the firm is not out of the woods. Its high exposure to Lido Staked Ethereum (stETH) is exposing the firm to margin calls, given that the token has de-pegged from Ethereum.
Its exposure to beleaguered lender Celsius, which recently suspended withdrawals, is also expected to pressure its portfolio.
- MetaMask Launches Hyperliquid Perpetuals In-App, Plans To Integrate Polymarket
- XRP Treasury Holdings Hits $11.5B as Nasdaq-Listed Reliance Global Adds $17M in Fresh Buy
- FOMC Minutes, Jerome Powell Speech: Will Bitcoin Recover or Retrace Further?
- “Meme Coin SZN Is Here,” Says CZ As GIGGLE, 4 Price Skyrocket to All time Highs
- CZ’s YZi Labs Commits $1 Billion Builder Fund As Binance Coin Surpasses XRP
- XRP Price Prediction Amid ETF Approval Roadblock as Analyst Warns of $2.72 Dip
- Binance Coin Price Prediction If It Surpasses Bitcoin Marketcap— Is $3000 Possible in 2025?
- ASTER vs HYPE Price Analysis – Which Perp DEX Token Looks Poised to Dominate Q4 Performance?
- Ethereum Price Could Soar to $6,500 as BlackRock’s ETF Nears $20B Milestone
- Cardano Price Consolidates Below Key Resistance Ahead of ETF Verdict — Is a 50% Rally in Sight?
- Solana Price Eyes 56% Rebound Amid Solana Company’s Massive $530M SOL Acquisition
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.
