Three Arrows Capital accused of swindling $1m by HK crypto firm

Crypto trading platform 8 Blocks Capital has accused Three Arrows Capital of using its funds, worth US$1 million, to repay lenders and counterparties after the latter allegedly underwent over US$400 million in liquidation.

Three Arrows Capital co-founder Su Zhu / Photo credit: Three Arrows Capital

Singapore-based crypto hedge fund Three Arrows Capital could be in danger of insolvency. It has reportedly maintained limited contact with its counterparties since being liquidated.

Three Arrows Capital, which is also known as 3AC, did not stick to the agreement with 8 Blocks Capital, which states that the latter can withdraw funds any time at its convenience, 8 Blocks Capital CEO Danny Yuan said in a series of tweets earlier today. He added that 3AC was not supposed to move 8 Blocks Capital’s funds without prior permission.

On June 12, 2021, Yuan said that 8 Blocks Capital asked for a withdrawal as the market dropped, which 3AC complied with. The next day, when the market kept sinking, 8 Blocks Capital’s request for a larger withdrawal was not answered.

Later, on June 15, the Hong Kong-based firm noticed that roughly US$1 million was missing from its accounts with 3AC.

Three Arrows Capital has yet to respond to 8 Blocks Capital’s request for an explanation regarding the missing funds.

“This was a mutually beneficial relationship for over 1.5 years. We had known [3AC] since 2018, though they were competent, and didn’t think they were degen enough to lose billions and not employ basic risk management,” Yuan said.

However, the CEO said that 8 Blocks Capital is “fine” and has a plan to recover the missing amount.

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3AC, which was founded in 2021 and manages an estimated US$10 billion, has positions in many of crypto’s largest projects and companies including Bitcoin, Ethereum, Solana, and BlockFi, among others.

On June 15 this year, 3AC said it is in the process of communicating with relevant parties and is fully committed to working out its liquidity issues. The collapse of Terraform Labs’ Luna token last month also resulted in huge losses for 3AC, which is a huge backer of the Seoul-based crypto firm.