The founder of the DeFi and Web3-gaming focused venture firm DeFiance Capital, Arthur Cheong, said that his firm “is not done” after a week of stress in the crypto markets.
We are not done and is actually actively working to resolve the situation.
My and our team behaviour and action is consistent and this will not change.
— Arthur (@Arthur_0x) June 17, 2022
We are not finished, and we are actually actively working to resolve the situation. My behaviour and that of the team is consistent, and this will not change,
On June 13, the crypto-lending platform Celsius suspended withdrawals, trading and transfers between accounts ‘due to extreme market conditions’. However, analysts suggested that the real cause was a ‘liquidity crisis’, which prevented the firm from making client payments.
Against this backdrop, the price of Bitcoin fell below $23,000, and market capitalization shrank to under $1 trillion. Yet experts linked this to macroeconomic conditions.
The Georgetown University law professor Adam Levitin suggested that the Celsius bankruptcy is likely inevitable. Media reported that major investors in the platform refused to provide additional financing.
On June 17, Babel Finance announced a suspension of payments and withdrawals from its own products due to liquidity shortfalls.
There were also reports of solvency issues at one of the industry’s leading hedge funds, Three Arrows Capital (3AC), which owns stakes in many projects. Co-founder Su Zhu said that the problems are being resolved.
However, 8 Blocks Capital’s head of trading Danny Yuan accused the firm of using client funds to cover margin calls.
According to The Block, 3AC helped create DeFiance Capital, and the latter acts as the company’s ‘sub-fund and share class’.
On June 15, Cheong tweeted a crying emoji, to which Frank Chaparro, the editor of the publication, replied:
‘You will get through this’.
😢
— Arthur (@Arthur_0x) June 15, 2022
One user confirmed that 3AC incubated the venture firm and owns a stake in it or wholly owns it.
As reported by the Financial Times, BlockFi liquidated at least part of 3AC’s positions. Zac Prince, head of the firm, said they had ‘made their best business decision regarding a client who could not meet margin loan obligations with excessive collateral’.
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