Before rumors of Three Arrows Capital’s insolvency, many companies were advised to freeze 3AC funds to recover assets after litigation

According to a Twitter thread by Danny Yuan, CEO of trading firm 8 Blocks Capital, it appears he is calling on the fund-holding platform owned by Three Arrows Capital (3AC) to freeze assets, as rumors of the 3AC insolvency are still emerging.

Liquidity provider asks platforms to freeze Three Arrows Capital funds to recover assets after litigation

Yuan said their team detected that $1 million was missing from their company’s funds at 3AC. He explained their company’s involvement with 3AC, noting that they are paying the company to use the trading accounts they own.

“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”, he added. According to Yuan, there was no problem until June 13, when 8 Blocks Capital requested a large withdrawal because of market conditions. The commercial company’s CEO said there was no response from 3AC. However, things started to get tricky when 8 Blocks Capital discovered through a scenario that $1 million was missing from their account with 3AC. Yuan said he reached out to 3AC co-founder Kyle Davies and their team to inquire about the missing funds. However, they received no response.

As rumors of 3AC defaulting are circulating online, Yuan noted that they have released what they know about the matter to gauge the extent of the situation. Later, Yuan said they were contacted by people with ties to 3AC as their company.

Yuan also emphasized that 3AC still has many assets on different platforms, which he did not name. Because of this, Yuan has publicly asked those platforms to freeze 3AC’s funds so that the company can repay its debt following future legal proceedings. In another development, BlockFi CEO Zac Prince said that BlockFi was part of the lender’s group that canceled some $400 million in loans to 3AC.

Prince said no client funds were affected and noted that BlockFi was one of the first to take action with the unnamed counterparty. Although the CEO has not explicitly named the client, his tweet followed a Financial Times report claiming BlockFi was among the groups that liquidated at least some of 3AC’s positions.

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