BlockFi liquidated the "big client", is the collapse of another crypto company coming?

BlockFi has confirmed that it has liquidated a "large client" to mitigate risks in accordance with contracts with specific counterparties. Although it did not explicitly name the client, according to the Financial Times, the counterparty was the hedge and venture capital fund Three Arrows Capital (3AC).

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BlockFi liquidated the "big client."

"BlockFi can confirm that we have recently applied our best business judgment to a large client that has failed to meet its obligations under a secured margin loan," BlockFi CEO Zac said on Twitter. Prince. "We have fully accelerated the loan and fully liquidated or secured all related collateral."

The shaken market continues to cause problems for some well-known names in the sector, such as the Celsius platform, which has decided to reduce selections users with reference to extreme market conditions. The liquidity crisis is also plaguing other crypto-companies, which are trying to meet their obligations to creditors.

Client funds remain intact because BlockFi was one of the first to take action with an unnamed counterparty, Prince added in subsequent tweet. It is rumored that the company 3AC facing insolvency after the liquidation of $ 400 million.

$ 400 million in liquidation has put Three Arrows Capital in trouble

3AC withdrew this amount in Ethereo (ETH) and also in synthetic token (stETH) during the market crash to sell the tokens on the market and pay its investors. As the Dubai-based company failed to meet its obligations regarding margin calls on borrowed collateral, 3AC tried to cover its debts by selling these assets at a loss.

The company is said to have run into difficulties due to its participation in the now defunct Terra ecosystem and illiquid investments in stETH through the Lido Finance protocol. Although stETH is fully supported by Ethereem in the Beacon Chain, it cannot be exchanged for ETH on a 1: 1 basis until withdrawals are allowed after merger blockchains. StETH is trading at about 0.93 ETH.

Now that there have been rumors of the fund's insolvency. Zhu commented on the topic when he wrote the following statement on his twitter account.

"We are in the process of communicating with the relevant parties and we are fully committed to resolving it."

Crypto revenue generator Finblox became another company involved in 3AC's problems, imposed a monthly withdrawal limit of $ 1,500 and suspended the distribution of rewards on Thursday.

"Some investors have lost confidence in crypto in general. People who have joined DeFi fear more similar events, so they continue to sell and reduce leverage, ”said Youwei Yang, StoneX's director of financial analysis for financial services.

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All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.