Cryptocurrency hedge fund Three Arrows Capital said on Wednesday it was committed to working things out, seemingly addressing social media chatter that it is facing liquidation issues. “We are in the process of communicating with relevant parties and fully committed to working this out,” Su Zhu, the co-founder said in a tweet, without going into further detail.
The rumours of funding pressures come as bitcoin hit a fresh 18-month low, extending falls triggered after major crypto lender Celsius Network froze withdrawals and the prospect of sharp US interest rate rises shook the volatile crypto asset class.
A vague tweet by a founder of Three Arrows Capital, an influential hedge fund that has been liquidating crypto holdings as prices plummeted, started stirring fresh apprehension in an already shaken industry.
Zhu and Davies are thought to be among the world’s biggest crypto holders. Three Arrows was estimated in March to be managing around $10 billion in assets, according to blockchain analytics firm Nansen. While information on its trading strategies is sparse, Three Arrows is known to hold stakes in a diverse range of different cryptoassets.
Three Arrows was among investors in a $1 billion sale earlier this year of Terra’s Luna cryptocurrency. But recent attention around the fund has centered around its exposure to a cryptocurrency called staked Ether, or stETH, a token offered by a DeFi app called Lido Finance that has become widely used in the market.
The fund started withdrawing stETH from decentralized platforms last month, according to Nansen. As recently as Tuesday morning, it withdrew more than 80,000 stETH from decentralized lending project Aave in four transactions and then swapped 38,900 of the stETH for 36,700 Ether, as reported by Bloomberg.
Crypto started sliding late last year on expectations of a less accommodative Fed, with rising interest rates hurting the industry and its prospects. Last month’s collapse of the Terra blockchain and the recent decision by crypto lender Celsius Network Ltd. to halt withdrawals have also taken a toll, while a tweet this week from the co-founder of crypto hedge fund Three Arrows Capital fueled speculation that it had suffered large losses.