Crypto hedge fund Three Arrows Capital, has been seen liquidating its holding in an effort to settle the debt and prevent the company’s liquidation.
In just one hour, a wallet linked to Three Arrows Capital liquidated almost 15k ETH on Compound.
Apart from this wallet, Three Arrows Capital has started liquidating its holdings in its other wallets as Ethereum (ETH) prices continue to fall. As a result, placing the firm under liquidation pressure.
Three Arrows Capital faces insolvency amid harsh market condition
Three Arrows Capital is now facing insolvency issues as financial conditions continue to deteriorate due to harsh crypto market conditions. This is coming after the insolvency issues of DeFi lending protocol Celsius.
PeckShieldAlert highlighted on June 15 in a series of tweets that Three Arrows Capital had liquidated almost 15k ETH in 5 transactions within just one hour. The wallet is on the verge of a $35 million Compound liquidation, with a levered ETH position with a 1.04 health factor.
The address uses USDT and USDC to repay debt and withdraw ETH. Thereafter, Three Arrows Capital converts ETH to USDT or USDC on Uniswap V3 and repays the debt on Compound.
Moreover, Three Arrows Capital has been repaying its debt on AAVE V2 to keep its 223k ETH valued at roughly $264 million from being liquidated. If the price of ETH falls to $1016, the ETH in the wallet will be liquidated. This would raise liquidation risks. Also, it will spark a big selloff in Ethereum, as observed in the last few hours.
Furthermore, Three Arrows Capital is liquidating its stETH holdings to ETH amid liquidation risks. The top firms have already liquidated their positions in Three Arrows Capital. Meanwhile, several crypto firms are now revealing their explore sure to Three Arrows Capital.
ETH could crash below $1000 following Fed meeting
Three Arrows Capital has been alleged to be insolvent, as it faces liquidation risks. Meanwhile, Zhu Su, the firm’s co-founder, has stated that they are working on the problem and communicating with relevant parties.
However, following today’s Federal Reserve FOMC meeting, the price of Ethereum (ETH) could go below $1000. The Fed may raise interest rates due to stagflation and sticky inflation.
