What happened to Three Arrows Capital? (summary of rumors)

Every round of bull-bear transition, there will be some well-known institutions, capital, and projects out of sight. The top five LUNAs fell to zero overnight, and Celsius, the largest lending platform in the United States, had to suspend withdrawals. Since yesterday, there have been rumors in the market that Three Arrows Capital, which is quite active in the primary and secondary markets, has also experienced a liquidity crisis. Su Zhu, the founder of Three Arrows, made a statement on social media this morning, which seems to confirm the rumors. Su Zhu said, "We are communicating with relevant parties and are committed to solving the problem."

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As for what happened to Sanjian Capital, we still have to wait for the official confirmation, but we can get a general outline of the situation of Sanjian through the analysis and information of some KOLs. Based on the information of several KOLs, this crisis is mainly divided into three parts: GBTC, stETH and Luna.

GBTC

According to public information, as of the end of 2020 , Three Arrows Capital is the largest holder of Grayscale GBTC, holding 5.6168% of GBTC shares, with a market value of approximately US$1.24 billion at that time.

As we all know, GBTC cannot be redeemed and can only be sold in the secondary market. If Sanjian wants to make up the Margin call, it can only sell GBTC in the secondary market.

What is more serious than the decline of Bitcoin is that Sanjian Capital seems to use leveraged buying bitcoin. According to the disclosure of crypto trader degentrading on his social networking site, Three Arrows Capital has lending positions with multiple mainstream lending platforms (such as BlockFi, Genesis, Nexo, Celsius, etc.). Therefore, if Sanjian Capital is liquidated, the impact will be extremely extensive.

stETH

stETH's recent problems are mainly caused by looping For borrowing, Sanjian Capital seems to be leveraging on revolving loans, and the market decline also forced Sanjian to sell.

According to the summary of trader MoonOverload on social networking sites, people think that Celsius is the biggest stETH dumper, but this is not the case: the biggest sell-off comes from Three Arrows Capital. The selling timing of the two institutions is different. Most of Celsius's selling was a week ago, while Three Arrows' selling was in the past two days. On-chain data shows that Three Arrows is dumping stETH through every account and seed round investment address it owns.

MoonOverload believes that most of these sell-offs look like they are paying down their debts and borrowings.

  Luna

Many opinions believe that the collapse of LUNA is an important reason for the problems encountered by Sanjian, a member of Terra Research Forum  FatMan stated that Three Arrows Capital once purchased 10.9 million LUNAs at a price of US$559.6 million, which is now worth US$670.45.

The above information seems to indicate that Sanjian Capital is experiencing Margin Call, and it is using All available assets. According to an encryption trader degentrading on his social networking site, Three Arrows Capital is pledging the equity shares previously obtained in the primary market in exchange for more liquidity.

Hope Sanjian Capital can get through this difficult time.

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