Early today, 8BlocksCapital asked other platforms to freeze the funds of Three Arrows Capital (3AC), amidst all the alarming insolvency rumors surrounding the latter!
3AC is reportedly trying to fulfill its margin call through its investors fund. Yes, the firm is apparently ghosting its investors to keep its ‘margin call’ alive. Or at least is accused of doing so!!
In a tweet thread, the Head of Trading at 8BlocksCapital, Danny accused 3AC of maliciously utilizing investors funds to fulfill margin calls. The whole matter surfaced as 3AC’s liquidation sent shivers down the crypto market, and investors started seeking withdrawals of their funds from 3AC.
Danny takes twitteratis back to November 2020, when 8BlocksCapital signed a partnership with 3AC in which the former would pay them a fee to use 3AC’s trading accounts.
Elaborating on 8BlocksCapital’s trading potential, Danny said that as a delta neutral market maker in the crypto markets, the firm is very sensitive to trading fees!
This especially holds true, ‘when one is trading 9 figures USD/day, even 1 bip on 100,000,000 is $10,000. If one is doing that on a daily basis, it sums up to a huge amount and that too very quickly, explained Danny.
Thus, both the firms agreed to 8BlocksCapital being free to withdraw their funds as per their needs. Consequently, 100% of the profit and loss belonged to them.
As the agreement dictated, 3AC didn’t possess the right to move its partners’ funds without permission (as it increased the risk of 8BlocksCapital’s positions getting liquidated). In return, 8BlocksCapitals will pay them fees for their service.
Danny called their relationship a mutually benefiting one, he wrote, “This was a mutually beneficial relationship for over 1.5 years. We had known them since 2018, thought they were competent and didn’t think they were degen enough to lose billions and not employ basic risk management.”
On June 12th, as the market dropped and required some funds from the account for positions on other exchange platforms, 8BlocksCapital asked for a withdrawal from the Operational team which was honored by 3AC.
On the following day, as the market-crash continued, 8BlocksCapital asked for a bigger withdrawal. There was no reply and the firm didn’t think much of it. After a while, the market stabilized and the firm did not need the funds.
On June 15, Danny said that they noticed 1million was missing from their accounts with 3AC. The firm reached out to Kyle Davies from the Ops team on Telegram about the missing funds. But to no avail!! There were no replies from them.
Danny revealed, “Then our traders noticed that there were a few rumors circulating on Twitter speculating on 3AC’s insolvency. Since we were directly involved, we felt the need to tell the world about what had occurred and gauge the extent of the 3AC contagion.”
The firm learnt that 3AC were ‘leveraged long’ everywhere and were getting ‘margin-called’. But what does 3AC do in such an intense hour, instead of answering the margin calls, it ‘ghosted’ everyone.
The platforms were left with no choice but to liquidate their positions, causing a further dump in the market!
Danny thus urged other platforms to freeze 3AC assets so that those who 3AC owes can be paid back in the future after legal proceedings.
Danny clearly and conclusively accused 3AC of using their funds worth $1M to answer their margin calls!
Let’s see if legal actions can hunt the ghost down, especially when the crypto curse haunts investors!!