Three Arrows Capital, the cryptocurrency fund firm backing Starry Night Capital, is said to be going through insolvency issues.
Kyle Waters, a research analyst at Coin Metrics, shared information on Twitter, underscoring the current state of Three Arrows Capital, the crypto fund firm backing Starry Night Capital. Founded in 2012 by Su Zhu, who was once a securities trader a Deutsche Bank, and Kyle Davies, a former Credit Suisse trader, Three Arrows Capital has become one of the most formidable crypto hedge funds.
According to Waters’ tweet, Starry Night “moved its entire collection on SuperRare, totaling 70 works,” on which the company has spent over $21 million over the last 24 hours.
Three Arrows Capital launched Starry Night Capital in August last year with pseudonymous NFT collector Vincent Van Dough. Its initial goal was to raise $100 million and assemble “the world’s finest collection of NFTs.”
Starry Night’s SuperRare Page Showing Zero (0) Collection
According to Waters, the fund was able to amass a huge collection of crypto art, with some well-known works like “Lost Robbie” getting sold for approximately $1 million in 2021.
Rumors of Insolvency Abound
In Waters’ Twitter thread, he noted that all 70 works that were moved from SuperRare went to a single address. The address also showed other pieces from Art Blocks, KnownOrigin, Foundation, and other crypto art projects. Waters implied that it looks like Starry Night Capital’s backer, Three Arrows Capital, was doing some serious consolidation of assets.
The tweet thread implied that some of the moved collections were among those that Three Arrows Capital acquired when it went on an NFT buying spree last summer. Most of those artworks were from Art Blocks and were part of curated collections such as Fidenza and Ringers.
According to one of Waters’ tweets, the address of the new wallet to which the collections were moved seemed to be linked to other wallets owned by Three Arrows Capital. However, he did say it was unclear whether the company was preparing for liquidation or over-the-counter block trade of NFTs.
It doesn’t help that some voiced their concerns on a public platform like Twitter over Three Arrows Capital’s seeming financial issues. A Twitter user called ZeroHedge said the company, which he referred to as “a $10 billion leveraged hedge fund…has vaporized.”
On the part of Three Arrows Capital, it has been noted that it has sold $40 million worth of Lido’s staked Ether early this week. There are also rumors that the company suffered heavy losses due to its exposure to Terra Classic (LUNC).
The hedge fund did not comment on its recent movements. Still, on-chain data has prompted speculation that it is facing insolvency and may be the latest in a string of high-flying companies to succumb to the bear market.
Three Arrows Capital has not made it a habit to disclose its assets under management. Nevertheless, some believe it manages billions of dollars worth of assets. Hence, rumors of the company going through financial stress and insolvency can be pretty alarming.
Its founders have not issued any formal statement regarding the issue. However, Zhu took to Twitter to assuage the public and say they are in contact with relevant parties and are “fully committed” to resolving the situation.
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