A wallet linked to the bankrupt crypto hedge fund Three Arrows Capital has removed $33M worth of Staked ETH (stETH) from Curve Liquidity Farming Pool.
3AC Removes Millions in ETH From Curve Pool
For the first time in around ten days, one of the wallets linked with the struggling cryptocurrency hedge fund, Three Arrows Capital, has moved some funds.
According to Etherscan and Nansen, Three Arrows Capital has removed $33M in Staked ETH (stETH) from Curve Liquidity Farming Pool. It has also pulled 200 bitcoin (BTC), $4 million in Tether (USDT), and $4 million in wrapped ether (wETH) from another DeFi platform, Convex.
Three Arrows Capital declared bankruptcy in July after the demise of TerraUSD, an algorithmic stablecoin. Three Arrows invested $200 million in a $1 billion sale of Luna, TerraUSD’s sister coin, with the proceeds going into the Luna Foundation Guard, a reserve of assets aimed at maintaining TerraUSD’s peg to the US dollar. When TerraUSD and Luna failed, the hedge fund’s holdings were quickly depleted. Co-founder Kyle Davies stated that the company could handle the loss at the time.
What Comes Next?
The reason behind Three Arrows’s withdrawal remains undisclosed. stETH, which is issued by staking pools like Lido Finance in exchange for ETH, may only be redeemed for ETH six to twelve months after the Ethereum network shifts from proof-of-work to proof-of-stake. Unless, of course, one utilizes Curve, which has a liquidity pool for trading stETH and ETH, that has become unbalanced with far more stETH than ETH.
There is speculation that 3AC is clearing out its Curve account in preparation for borrowing ETH using its stETH as collateral so that it can participate in the airdrop of a new token resulting from a fork in the Ethereum blockchain. Otherwise, it will have to wait until the stETH can be redeemed for ETH following the Ethereum merge.
It previously dumped stETH into Curve alongside Alameda research after the token began trading at a discount to the Ethereum network’s native cryptocurrency, ether.
Unwrapping its wrapped ETH would change the ETH balance in the company’s wallet, making it eligible for a corresponding airdrop of the new forked token.
However, as part of the liquidation proceedings authorized by a British Virgin Islands court, 3AC may liquidate its wETH, bitcoin, and USDT holdings. In August, a Singapore court authorized Teneo, 3AC’s liquidators, clearance to access the company’s financial records to throw light on the location and availability of any remaining funds. These crypto assets, which were previously employed to offer liquidity, could become part of the hedge fund’s remaining assets.
3AC Faces Severe Claims From Creditors
Three Arrows held $3 billion in assets as of April of this year, but it is facing creditor claims from major players in the crypto sector, including Genesis Global Trading, which recently filed a $2.4 billion claim against the firm. Three Arrows had also borrowed $687 million from the bankrupt cryptocurrency broker Voyager, which has also declared bankruptcy.