After LUNA suffered a blows up, the crypto world has been like dominoes, with a succession of negative news. Recently, Three Arrows Capital (3AC), one of the world’s largest cryptocurrency-focused venture capital firms, has also been in a liquidity crisis and some of its pledged assets have been retired.
On June 19 (UTC+8) BTC “free-falling” below $17,700, a new low since 2022, the cryptocurrency market total market value of $3 trillion last November, now total market value of $900 billion, cryptocurrencies have evaporated $2.1 trillion in just seven months, close to the market capitalization of an Apple (AAPL, share price $131.56, market cap $2.13 trillion).
Before June 15 (UTC+8), news about Three Arrows Capital being insolvent, in liquidity crisis and bankruptcy liquidation kept brewing and fermenting in the market. On June 13, Three Arrows Capital co-founder Zhu Su had deleted ETH, AVAX, LUNA, SOL, NEAR, MINA and other Tokens from his personal profile in his Twitter, leaving only BTC.
On June 15 (UTC+8), Three Arrows Capital founder ZhuSu said on social media, “We are communicating with the relevant parties and working to bring the issue to a resolution.”
ZT Labs says the liquidation risk that Three Arrows Capital now faces actually stems from three parties.
1. before Terra collapsed in May, 3AC took over those locked-in Luna at a cost of $559.6 million, which is now worth about $670, and 3AC lost a lot of liquidity in Terra Luna
2. 3AC received a margin call to add and was liquidated, but did not have available liquidity of its own and had difficulty repaying the loan.
3. The industry has caused a serious ripple effect and the market is now focused on Three Arrows Capital, which has grown rapidly in recent years with a larger capitalization and influence, and market tensions will be amplified in a bear market.
Blockchain analysis company Nansen marked that from the on-chain traces of multiple wallets belonging to Three Arrows Capital, from May this year to the present, Three Arrows Capital has transferred a total of 100,000 ETH to the exchange FTX, not excluding that it is liquidating ETH.
ZT Labs believes that luna’s thunderstorm not long ago caused the strongest liquidity crisis ever in the crypto circle, and the largest hedge fund in the crypto circle, Three Arrows Capital, caused Celius, Babel and other Cefi finance platforms to save themselves by banning users from withdrawing coins, triggering a short-term run on some CEXs as well, causing people to have a crisis of trust in centralized exchanges, and AAVE, curve, Lido, Compound and other DEX lending platforms asset pools shrunk tremendously.
ZT Labs believes that the high threshold of Defi and the potential risk risk of smart contracts themselves are the most important reasons for ordinary users in the crypto market to participate in Cefi. This crisis of coin withdrawals on some exchanges will serve as a warning to the crypto circle and will drive the future innovation of Defi will move forward in a strong and reverent direction.
At present, ZT platform users have good asset liquidity, the function of filling and withdrawing coins is normal, and the platform business is being carried out smoothly and orderly.
ZT uses distributed server clusters, distributed storage, multi-machine standby high-speed memory transaction engine, cold wallets, private key offline hot wallets, and other advanced technologies to fundamentally ensure the safety of users’ assets. ZT provides bank-level security and risk control for every user.
In the future, ZT trading platform will provide compliant crypto asset financial services globally and provide policy protection for platform users, so that more users can enjoy safe, efficient and convenient digital asset derivatives services.