Three Arrow Capital CEO Shuts Down the $400 million Hack Speculations, Here’s What Happened

The crypto community was flooded with speculations of yet another hack, this time around the hedge fund manager, Three Arrow Capital’s wallets were at risk. However, the firm’s CEO has clarified that it is just a move from L1 to L2.

Earlier today, the Chinese journalist, Colin Wu tweeted that 91,477 ETH, which amounts to approximately $400 million were transferred from FTX, Binance and Coinbase to the wallet marked by nansen as Three Arrow Capital. The fearmongering spread like wild fire and the market was full of hack speculations, given the ongoing hack frenzy in the decentralized industry. Nevertheless, Three Arrow Capital’s CEO, Su Zhu took to Twitter and noted that there are multiple other incoming transfers to shift to L2.

Zhu continued claiming that L1 is highly unusable, especially for newcomers. However, this was not the first time Zhu commented against Ethereum despite being an avid user himself. Three Arrow Capital CEO has even said that he has “abandoned Ethereum despite supporting it in the past”, because the network is not affordable enough for new users. While saying that, he has contradicted himself emphasising on the importance of L2.

L2 to Resolve Scalability Issues

The need for Layer 2 scaling solutions on the Ethereum network has been proven inevitable by the Ethereum founder, Vitalik Buterin, to facilitate the safest and most sustainable way to scale Ethereum while preserving decentralization. Earlier this October, Buterin spoke at the 2021 Shanghai International Blockchain Week, highlighting the need for scalability and implementation of rollups.

Vitalik Buterin talked about L2 scalability in reference to the non-fungible tokens (NFTs) frenzy, together with the explosive growth of decentralized finance (Defi) on the Ethereum network. Vitalik suggested that moving all NFTs to layer-two solutions can beat the high gas fees issue, further advising blockchains and NFTs to transfer to L2 to counter scalability issues. According to Buterin, the mainstream blockchain has become overcrowded, causing problems like high transaction fees.However, he noted that upcoming scaling solutions may take longer than expected to become fully operational. Henceforth, he suggested Rollups as the second-best option for users. Rollups are a Layer 2 solution that handles transactions outside the Ethereum mainnet, i.e., Layer 1.