June 17, 2022 · 3 min read
The Weekly Wrap - 17th June 2022
Three Arrows Capital Facing Insolvency Issues
Dubai-Based Crypto Fund in Troubled Waters After $400M in Liquidations
Three Arrows Capital, also known as 3AC, is facing insolvency issues after the group liquidates more than $400M worth of assets. The group is reported to be in the process of repaying its lenders. The issues are likely to have arisen as a result of recent crypto market turmoil, which saw ETH and BTC fall by more than 30% in a week.
The insolvency was likely also related to the announcement that Celsius Network would be halting withdrawals until further notice. Assets held by 3AC are likely below sufficient value to repay all of its investors. Thus far, the group has not released a statement regarding the issue.
Celsius Halts Withdrawals
DeFi Network Stops Withdrawals and Stops Amid Market Chaos
DeFi network Celsius announced on Monday that its withdrawal and swap functionality would be suspended indefinitely due to “extreme market conditions”. The protocol is struggling to remain solvent amid crypto market turmoil. It went on to state that this action was necessary in order to stabilise its liquidity pools, and place the platform in a better position to honour its obligations over time.
On Tuesday, the protocol raced to top up its MakerDAO collateral to avoid the automatic liquidation process being triggered. 2000 wBTC of collateral was added, as BTC fell below $21,000 the following day (Wednesday). If this topup had not been made, a mass liquidation of the protocols assets would have occurred which would have had a catastrophic effect on markets.
Circle Announces Euro-Backed Stablecoin
Circle Expands Into European Stablecoin Market
The creators of USDC (the second largest stablecoin by market cap), plan to introduce a new stablecoin by the end of the month which will be backed by the Euro. The stablecoin (which will use the ticker EUROC), comes after Tether’s Euro-backed stablecoin EURt.
Uncertainty lies in how European regulators will approach a Euro-backed product being issued under US standards. Some believe that this may go against EU monetary policy. EU policy makers are in the process of laying out regulatory frameworks for stablecoins, and it is believed that more stringent rules will be introduced by the end of the month.
Elon Musk Faces $258B Lawsuit For Involvement in Dogecoin
Dogecoin Accused of Being a Pyramid Scheme
An individual is suing Elon Musk and two of his companies Tesla and SpaceX for ‘pumping’ the Dogecoin cryptocurrency. The lawsuit describes his involvement in the token to be a ‘racketeering scheme’, and represents people who have traded in the currency since April 2019. It claims that the token has no underlying value and should be legally considered gambling.
Musk has been known to tweet about the currency which would sometimes have a significant effect on its price. The lawsuit claims that this inflation of the price caused investors to lose billions. In addition to seeking damages, it also seeks to prevent Musk (and his companies) from ever promoting the cryptocurrency again.