Crypto hedge fund Three Arrows Capital facing possible insolvency after unforeseen liquidation

Cryptocurrency hedge fund Three Arrows Capital is facing possible insolvency after incurring at least $400 million in liquidations, The Block reported Wednesday.

Frank Chaparro, Editor-at-large at The Block, tweeted about the speculations around the liquidation issues.

Amid the speculation, the Dubai-based firm's co-founder Su Zhu on Wednesday posted a vague tweet and announced that it is committed to working on this.

Many reports suggest that this tweet could be presumably in response to social media rumours on the liquidation issues.

As per media reports, the firm may possibly have a minimum debt of $183 million against a collateral position of $235 million.

In 2012, Su Zhu and Kyle Davies co-founded Singapore-based hedge fund company 3AC that invests in crypto markets.

The firm also offers equity-backed NFT funds, and recently the complete collection of NFTs was moved to SuperRare. These funds have a number of NFTs from various collections that they can sell in order to pay off some debts. The firm also incurred losses during the Terra collapse.

Several analysts speculate that the market was in crisis as on Sunday the Celsius network announced that it was halting withdrawals and other functions like swaps and transfers due to extreme market conditions. There were also speculations around the Celcius selling staked ETH (stETH) in large quantities in order to reestablish liquidity for customer's withdrawals.

(The copy was updated to correct a typo in the third paragraph)