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Three Arrows Capital faces liquidations and market turmoil

Su Zhu and Kyle Davies
Su Zhu and Kyle Davies

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The cryptocurrency market continues to suffer a bloodbath, with Bitcoin trading at $20K. The resulting sell-off in the market is squeezing liquidity from the market, and Three Arrows Capital is the latest crypto firm to reportedly be affected by the crisis.

3AC reportedly faces liquidation

Several reports on Twitter have shared information that Three Arrows Capital, one of the largest funds in the cryptocurrency sector, could be facing liquidation. The fund is spearheaded by Zhu Su, one of the largest players in the crypto space.

The rumors of Three Arrows Capital facing liquidation were triggered by on-chain data showing that a wallet address linked to the fund has been actively paying back an AAVE debt against a position worth $264 million of Ether (ETH) to avoid being liquidation.

An insight by On-chain Wizard, a popular cryptocurrency analyst, said that if Ether’s price dips to $1042, 3AC’s position would be liquidated. Ethereum has been hardly hit by the current crash, and it is currently trading at a 17-month low of around $1100.

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At the time of writing, ETH was trading around the reported 3AC’s AAVE liquidation price. Some sources have said that the fund is currently figuring out ways to repay its lenders and other parties after being liquidated by leading lending firms in the sector.

Three Arrows Capital sustained intense losses after the collapse of the Terra ecosystem last month. The fund had invested heavily in the LUNA token, which dropped from above $100 to $0. At the market peak, this fund managed around $10 billion.

Zhu Su, the co-founder of the investment firm, posted a tweet on Wednesday saying, “We are in the process of communicating with relevant parties and fully committed to working this out.” The tweet confirmed market suspicion of the fund is facing major issues.

Celsius halts withdrawals

The recent events within the cryptocurrency space seem to be stressing projects. On Sunday night, the Celsius network announced that it was halting withdrawals and other functions like swaps and transfers because of “extreme market conditions.” These services are yet to be restarted 48 hours later.

In its latest tweet, Celsius announced that it was “working as quickly as possible and will share information as and when it becomes appropriate. Acting in the interest of our community remains our top priority.”

The ongoing crisis has affected the entire cryptocurrency market, and with Bitcoin currently at $20,000, some analysts have set the bottom price at $18,000.

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