A few months ago, crypto hedge fund Three Arrows Capital suffered the consequences of the collapse of TerraUSD. 3AC then encountered several financial difficulties which led it to file for bankruptcy in July. Currently, the company owes its users over $2.4 billion. It is in this context that it recently withdrew $33 million from stETH. The company did not indicate the real reasons for this withdrawal. Find out what could justify such an operation.
Why did 3AC withdraw $33 million from stETH?
According a tweet of Mike Rogers on September 6, “a wallet owned by insolvent crypto hedge fund Three Arrows Capital withdrew $33 million worth of staked ether (stETH) from the Curve pool, on-chain data shows“. 3AC also withdrew 200 BTC, or $4 million of USDT and $4 million of Wrapped Ether (wETH). These latest withdrawals were reportedly made from another decentralized finance (DeFi) platform called Convex.
The exchange of stETH for ETH can normally only be done between six and twelve months after the Ethereum Merge. However, the transaction can complete faster by using the Curve pool. You should know that the latter is facing an imbalance: it currently has less ETH than stETH. That said, Three Arrows Capital could use the withdrawn cryptos as collateral to borrow ETH.
And with its wETH, the company could increase the funds in ether (ETH) of its wallet. This would allow it to become eligible for the airdrop of a new token from the Ethereum fork. 3AC may also liquidate all withdrawn funds following liquidation proceedings ordered by a court in the British Virgin Islands.
Three Arrows withdraws $33 million from stETH as it comes under pressure from creditors demanding their holdings. The crypto community hopes very quickly to learn more about the real reasons for this withdrawal.
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