The Avalanche team announced today that it has very limited trading with hedge fund Three Arrows Capital, which is at risk of bankruptcy. In the statement made on Avalanche's official Twitter account, it was emphasized that Three Arrows has no control over Avalanche funds. Meanwhile, Three Arrows faces potential liquidation risks as it fails to make up for collateral on several platforms.

Blockchain network developers probably felt the need to make such a statement, as the Hedge Fund was one of Avalanche's biggest investors in 2021. The biggest investors in Avalanche's $230 million investment round in 2021 were Three Arrows Capital (3AC) and Polychain. After the investment round, Avalanche sent a significant amount of Avalanche (AVAX) tokens to 3AC in a private sale.


Three Arrows started converting Lido Staked Ethereum (stETH) funds to Ethereum at the beginning of the week as the liquidity crisis deepened. The institution that sold a large amount of Lido Staked Ethereum (stETH) also contributed to the deterioration of the Ethereum stability of the crypto asset. According to the latest Blockchain data, all stETH tokens in 3AC's portfolio have been converted to Ethereum (ETH).

Prior to Avalanche's announcement, crypto lending firm Nexo also revealed that it is not affiliated with Three Arrows. On the other hand, the news that the liquidation process of Three Arrows Capital, which could not maintain its positions in the first hours of the day, began to spread. In particular, the fact that BlockFi reported that a large customer was liquidated because it could not close the collateral gap today brought 3AC to mind. BlockFi also reported that its financial structure is safe.

The risk of liquidation of 3AC after the Celsius crisis continues to contribute to the market decline, which was under selling pressure due to external factors.