3AC Withdraws $45M From Curve And Convex

Table of Contents

• 3AC Pulls Out From Curve
• Clearing Out Convex Holdings
• Why Were The Funds Withdrawn? 
• Looking Back

Crypto hedge fund Three Arrows Capital (3AC) has withdrawn assets worth $33 million from Curve Finance and another $12 million from Convex Finance. 

3AC Pulls Out From Curve

Three Arrows Capital’s troubles are far from over. The hedge fund was recently compelled to reclaim $45 million in deposits it had previously staked on two different decentralized exchanges. The first of these two withdrawals was from the stablecoin exchange Curve Finance. 3AC reclaimed 20,945 staked ether (stETH) from Curve, which is worth around $33.3 million. The transaction happened in the early hours of Tuesday morning and was pointed out by blockchain analytics platform Nansen, which identified an Ethereum address as belonging to 3AC. 

Clearing Out Convex Holdings

Further on-chain data revealed that the investment firm also withdrew funds from Convex Finance, which is a DeFi protocol built on top of Curve Finance and boosts rewards for CRV stakers. The funds withdrawn from Convex include 2,421 wrapped ether (wETH), 202.7 wrapped bitcoin (wBTC), and 4,051,367 USDT stablecoin, which amounts to a total of roughly $12 million. All the withdrawn funds are currently being held on the 3AC wallet, which now holds assets worth $57.86 million. Furthermore, the firm also holds $86.8 million in tokens and NFTs across several other addresses. 

Why Were The Funds Withdrawn? 

Basically, experts are wondering about the withdrawal, especially in the context of the $3.5 billion that the company still owes its creditors. Many believe that the firm may be thinking of liquidating its holdings to pay off these creditors. 

The withdrawals have given rise to many questions, as stETH cannot be redeemed for ETH till after six months of the Ethereum Merge. Therefore, speculation is rife that 2AC is planning to borrow ETH by putting down the withdrawn stETH as collateral, all in order to drop new crypto. Another school of thought is that the firm is willing to bear through the months of wait after the Merge, when stETH would be exchangeable for ETH. 

Looking Back

Three Arrows Capital was one of the worst affected in the aftermath of the Terra LUNA debacle. The firm had committed a whopping $200 million to the sale of the LUNA coin, which was reserved to maintain TerraUSD’s dollar peg. Once the stablecoin lost its dollar peg, the value of LUNA plummeted, and the hedge fund lost all its holdings. The company was forced to declare bankruptcy in July 2022, and the founders toyed with the idea of moving to Dubai. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.