3AC fund reported betting on NFTs as rumours spread over insolvency

By Raffaele Redi

Speculation rife that Singapore-based crypto hedge fund is facing insolvency

A view of skyscrapers dwarfed by a giant Bitcoin symbol                                 
The 3AC crypto hedge fund mainly invests in cryptos and digital assets – Photo: Shutterstock

Reports that the crypto hedge fund Three Arrows Capital (3AC) is liquidating its assets has fuelled speculation that further consolidation efforts might include its holdings of non-fungible tokens (NFTs).

“3AC has started to consolidate their NFT holdings,” tweeted crypto trader and NFT collector Moon Overlord yesterday. “They have a massive Art Blocks Curated collection as well an impressive Superrare and Foundation collection. Wonder if we'll see the biggest NFT auction(s) of all time.”

Sources had told The Block that the Singapore-based hedge fund is facing insolvency after lenders called for it to be liquidated. “Three people said the liquidation totalled at least $400m,” reported The Block.

In a tweet, 3AC’s co-founder Zhu Su did not confirm nor deny the rumours, but simply said: “We are in the process of communicating with relevant parties and fully committed to working this out.”

Terra investments and the staked ether

According to Blockworks, 3AC had a “substantial” investment in Terra, the network responsible for the TerraUSD UST stablecoin that collapsed in May. Due to its exposure to Terra, 3AC “drew attention on social media after it began dumping its staked ether (stETH)”, reported Blockworks. The price of stETH has almost halved to around $1,000 over the past 30 days, according to CoinMarkeCap.

3AC is believed to hold around $10bn in assets, reported Bloomberg in April. The Accounting and Corporate Regulatory Authority, the official register for companies in Singapore, still lists the status of 3AC as “live company”. 

Three Arrows Capital did not immediately respond to a request for comment.

All values are correct as of 12:30 BST (UTC +1).

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