8 Blocks Capital has called for the Freeze of 3AC funds
8 Blocks Capital has called for the funds of 3 Arrows Capital to be frozen. The call was made by Danny Yuan, the co-founder and Chief Executive Officer (CEO) of the company.
In a June 16 Twitter post, he wrote that this has become necessary pending legal proceedings to recover the funds of investors in the possession of 3 Arrows Capital. Yuan maintained that the agreement between the two companies stipulated that 8 Blocks Capital funds should never be moved without permission.
What Transpired Between 8Blocks Capital And 3AC
In his explanation of what transpired between his company and 3AC, Yuan said that 8 Blocks Capital has been doing business with 3AC since November, 2020, when the duo entered into a cooperative agreement. The deal was to use 3AC trading accounts for 8 Blocks Capital clients.
According to Danny Yuan,
“So our agreement with them was: we withdraw whenever we want. 100% of the PNL belongs to us. They are never to move our funds without permission (increases the risk of our positions getting liquidated) and in return, we pay them fees for their service.”
One Withdrawal Honored And Then…
He further said that in the course of the market downturn, 8 Blocks Capital requested for a withdrawal and it was honored. As the market downturn continued, the company requested for a bigger withdrawal on June 13, a day after the previous withdrawal request but received no reply.
1) What happened between 3AC and us and what we know so far:@zhusu @KyleLDavies
— Danny (@Danny8BC) June 16, 2022
Yuan said that the 8 Blocks Capital didn’t make anything out of it since the market stabilized and they no longer had need for the requested fund.
“We thought maybe they were just busy,” Yuan said.
Then he added:
“Fast forward to 24 hours ago, our funds monitoring script noticed that ~1m was missing from our accounts with them. We reached out to @KyleLDavies, the Ops team on Telegram about the missing funds- no replies. We tried calling them- they were online and they didn’t pick up.”
Poor Risk Management Strategy
Yuan said that the 8 Blocks Capital felt that it was necessary to tell the world of what was happening after the rumors filtered out that 3AC was insolvent. He added that since their clients also heard the rumor and 8 Blocks Capital has been involved with 3AC for 1.5 years, they were sure that telling the story was the right thing to do.
“We had known them since 2018, thought they were competent and didn’t think they were degen enough to lose billions and not employ basic risk management.”