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Claimed to have been embezzled millions of funds by Three Arrows Customer: Three Arrows dragged everyone down

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"Call on the platform to freeze the assets of Sanarrow"

Danny, 8 Blocks Capital

0x9F, BlockBeats

This post is from Danny, head of trading at 8 Blocks Capital, on his personal social media platform and translated by BlockBeats:

From November 2020, we have an agreement with Three Arrows Capital to pay them a fee for access to their trading account. As Delta neutral market makers in the cryptocurrency market, we are very sensitive to transaction fees. When you trade nine-figure dollars every day, even 1 basis point of 100 million is $10,000. If you do this every day, the costs can quickly add up.

So our deal with them is: we can get out when we want. Profits and losses are 100% ours. They can't move our money without permission (which increases the risk that our positions will be liquidated), and in return we pay them a service fee.

It's been a mutually beneficial relationship for over a year and a half. We've known them since 2018, thought they were capable, thought they wouldn't degen to the point of losing billions without taking basic risk management.

On June 12, as the market fell, we needed to withdraw some funds from our account for positions on other trading platforms, so we asked our operations team to withdraw funds as stated in the agreement. On June 13, as the decline continued, we requested withdrawals of a larger volume of funds. We didn't get an answer, but we didn't think anything of it. After a while the market stabilizes and we don't need the money anymore. We thought they were just too busy.

Fast forward 24 hours, and our money monitoring script noticed that we were missing about $1 million from our account with them. We asked KyleL Davies and the Telegram operations team about the missing funds, but still no response. We tried to call them, but they weren't answering even though they were online.

Then our traders noticed that there were some rumors circulating on Twitter speculating that Three Arrows had gone bankrupt. Because of our direct involvement, we felt compelled to tell the world what was happening and measure the extent of contagion at Three Arrows capital.

We've contacted a number of people with direct ties to Three Arrows Capital. What was learned was that Three Arrows had long leveraged itself in various places and had been required to make margin calls. Instead of responding to margin calls, they took everyone down with them. The platforms had no choice but to liquidate their positions, causing the market to fall further. However, they still have assets on some platforms, and we call on these platforms to freeze their assets so that creditors of Three Arrows capital can be compensated in the future through legal procedures.

In most cases, they don't speculate with clients' money as Celsius does (maybe another day to write an article about our dealings with them in 2019), however here they do respond to their margin call with our money (about $1 million).

It's one thing to lose a bet, but at least have a sense of honor and don't drag someone else into your bet. Don't sneak up on everyone because they might be able to help you.