Ethereum competitor Avalanche said on Friday that it has little exposure to beleaguered hedge fund Three Arrows Capital, as the latter faces a potential insolvency.
The blockchain said in a cvrkut 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 as the hedge fund failed to meet several margin calls by lenders.
The hedge fund was a major investor in Avalanche in 2021, and likely holds AVAX tokens.
Three Arrows Capital led an Avalanche funding round
3AC along with Polychain led a $230 million investment in Avalanche last year, that saw the blockchain issue AVAX tokens to Three Arrows in a private sale.
AVAX, Avalanche’s native token, has slumped in value this week on fears that Three Arrows could dump its stake to cover its positions. The token is down nearly 32% in the past seven days at $16.41. A broader crypto market decline has also contributed to its weakness.
Three Arrows is liquidating its Lido Staked Ethereum (stETH) funds as the market crisis is deepening. It liquidated 15k stETH in one hour earlier this week, and has been repeatedly reducing its exposure to the token.
All the stETH holding in the wallet has been likvidiran by 3 Arrows Capital as per the latest update. stETH has plunged by 39.76% in the last 7 days, and is still trading at a sizeable discount to Ethereum.
Crypto lenders also deny major exposure
Avalanche is not the first one to make such a statement regarding Three Arrows Capital. Crypto lender NEXUS had also made it clear that 3AC has no exposure with its digital assets.
Earlier on Friday, BlockFi said it had liquidated a “large client” when they failed to meet their obligations. While reports said that this was likely Three Arrows, BlockFi reassured investors that it was fiscally sound.
The liquidation risks faced by Three Arrows have contributed to the broader downturn in the crypto market in the past weeks.
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Source: https://coingape.com/avalanche-distances-itself-from-three-arrows-amid-insolvency-fears/