Ethereum competitor Avalanche said Friday it has little exposure to beleaguered hedge fund Three Arrows Capital as the latter faces a potential insolvency.
The blockchain said in a tweet that Three Arrows never had any control over Avalanche’s treasury funds.
Avalanche’s comments come as Three Arrows faces the potential liquidation of its positions because the hedge fund failed to meet several margin calls from lenders.
The hedge fund was a major investor in Avalanche in 2021 and likely owns AVAX tokens.
Three Arrows Capital Led An Avalanche Financing Round
3AC partnered with Polychain to lead a $230 million investment in Avalanche last year, with the blockchain issuing AVAX tokens to Three Arrows in a private sale.
AVAX, Avalanche’s original token, has fallen in value this week over fears that Three Arrows could dump its stake to cover its positions. The token is down nearly 32% in the past seven days to $16.41. A broader decline in the crypto market has also contributed to its weakness.
Three Arrows is liquidating its Lido Staked Ethereum (stETH) funds as the market crisis deepens. It liquidated 15k stETH in an hour earlier this week and has repeatedly reduced its exposure to the token.
All the stETH holdings in the wallet have been liquidated by 3 Arrows Capital as per the latest update. stETH is down 39.76% in the last 7 days and is still trading at a hefty discount on Ethereum.
Crypto Lenders Also Deny Major Exposure
Avalanche is not the first to make such a statement about Three Arrows Capital. Crypto lender NEXO had also made it clear that 3AC has no exposure to its digital assets.
Earlier on Friday, BlockFi said it had liquidated a “major client” when they failed to meet their obligations. While reports said this was likely Three Arrows, BlockFi assured investors it was fiscally sound.
The liquidation risks facing Three Arrows have contributed to the broader crypto market downturn in recent weeks.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication is not responsible for your personal financial loss.
This post Avalanche distances itself from three arrows amid insolvency fears
was published first on https://coingape.com/avalanche-distances-itself-from-three-arrows-amid-insolvency-fears/