Infamous hedge fund Three Arrows Capital withdraws $33 million worth of ‘staking ETH’ (stETH) from Curve’s liquidity pool
Three Arrows Capital Moves Funds Actively
In addition to this withdrawal, a wallet owned by the infamous hedge fund Three Arrows Capital ( 3AC ) also took $4 worth of Bitcoin ( BTC ), and Tether (USDT) coins from another DeFi platform, Convex, according to Etherscan and Nansen. million and wrapped ether (wETH) for the same amount.
Recall that in early July, Three Arrows Capital filed for bankruptcy, as it was dragged into the ” funnel of death ” formed after the collapse of the Terra project. It is known that Three Arrows previously invested $200 million in Luna, the sister coin of TerraUSD, designed to provide liquidity to support TerraUSD’s peg to the US dollar.
After the collapse of TerraUSD and Luna, Kyle Davis, co-founder of the fund, said that the company could absorb these losses. Against the backdrop of all these events, on-chain analysts drew attention to the fact that in June the hedge fund began to massively get rid of stETH during the TerraUSD fall.
Preparing for the airdrop…
The reasons for the current active withdrawal are unclear. As you know, the staking token of the Lido stETH platform can be exchanged for ETH only 6-12 months after the transition of the Ethereum network from the PoW consensus mechanism to PoS.
However, there is also the Curve liquidity pool, which allows you to exchange stETH and ETH, while now the ratio of assets in this pool is unbalanced, and the amount of stETH exceeds the amount of ETH.
Possibly, by withdrawing assets from Curve, 3AC is preparing to borrow ETH against collateral in the form of stETH in order to be able to participate in the airdrop of a new token launched as a result of a hard fork on the Ethereum blockchain. Recall that back in August, Ethereum miners conceived a new fork to stay on the old Proof-of-Work (PoW) mechanism. Otherwise, the company would have to wait at least another six months after the Merge to exchange their stETH for ETH.
In addition, the ETH balance on the Three Arrows Capital wallet can also be changed by withdrawing from the wrapped ETH pool. It may also help 3AC participate in the airdrop of the new token.
…Or just liquidation
However, it is possible that all of these cash transfers are simply part of a court-ordered liquidation procedure.
Recall that back in July, a US court froze the assets of Three Arrows Capital and granted the liquidators of the hedge fund the authority to dispose of its remaining assets. It is likely that the liquidators now considered the 3AC crypto assets, which were previously sent to liquidity pools, to be part of such “remaining assets”.
In July, information appeared that the bankrupt fund owed about $2.8 billion to creditors. According to published documents, among its creditors are the already bankrupt firms Celsius Network and Voyager Digital, as well as companies such as BlockFi, Digital Currency Group (owner of CoinDeskAlgorand, and Galaxy Digital.