Three Arrows Capital Owns Far Less Deribit Shares than Claimed

Paigambar Mohan Raj
Source: beinchain

According to a source for CoinTelegraph, Three Arrows Capital’s (3AC) Deribit shares are allegedly close to $25 million. This points to a massive discrepancy between the amount stated in the affidavit filed in a British Virgin Islands court.

In late June, Three Arrows Capital was liquidated by the British Islands court. In the court documents, 3AC was deemed insolvent and in need of being “wound up.” Moreover, the filings detailed 3AC’s assets, which included shares in  Grayscale Bitcoin Trust (GBTC), Bitcoin (BTC), Avalanche (AVAX), Near (NEAR), and claims of Deribit. As per the court filing, Deribit shares accounted for $500 million, or about half of 3AC’s assets. The new allegation about the Deribit shares being closer to $25 million sure comes as a surprise.

Three Arrows Capital’s Special Purpose Vehicle

According to the source, the discrepancy can be attributed to the kind of exposure Three Arrows Capital had to Deribit. The source asserts that 3AC holds shares in a Singapore Special Purpose Vehicle (SPV) dubbed 3AC QCP Deribit SPV instead of directly owning shares in Deribit. The SPV’s two biggest owners are 3AC and a holding company called QCP Soteria Node. Moreover, Three Arrows Capital’s co-founder Zhu Su is one of the directors of the SPV. Additionally, the SPV owns 23% of Deribit. Furthermore, of the 23%, 3AC owns 16%. This makes it the largest shareholder of Deribit.

The source stated,

“The owner of the SPV shares cannot sell or transfer the underlying Deribit shares without unanimous consent […] This means that the owner of the shares will be stuck with the SPV. These are entrenched in SPV constitution.”

According to the source, QCP Soteria Node has additional contractual authority. This includes the right of first refusal and tag-along rights on 3AC’s SPV shares. 

In addition, the source claims that 3AC has sold some of its share from the 16% stake through “binding side letters to numerous parties.”

Three Arrows Capital was once a revered crypto hedge fund, and the firm collapsed after the Terra (LUNC) fiasco. It is one of three crypto giants to have fallen from grace this crypto winter.