The 3AC Story Gets Wilder

A few weeks ago I spoke about the fall of 3AC the shitcoin fund that blew itself up and could not meet redemptions. Plenty of CEFI institutions were exposed to it and now that they cannot meet their obligations their LPs are on the line for the lost funds causing a massive deleveraging in the space as assets are sold off to cover the whole in the balance sheet.

Money is being raised, new lines of credit are extended to these firms like BlockFi and it's a bit of a shitshow to say the least. As the bear market lays bear where the leverage was, where the rehypothecation took place, and where the major frauds are, 3AC seems to be at the center of it.

The story began as a team of investors who were simply way to bullish on market conditions and the future of crypto as many are guilty of, but now as the details of the default come to light, we're seeing a whole new take on it, one of fraud and another massive shitcoin related scam to add to the books.

The numbers are nothing to turn your nose up about

Some say 3AC may have been liquidated for around 400 million USD already while there are claims that 3AC Owes $655 Million to Voyager Digital, they've already been liquidated by BlockFi and a few other providers they worked with so how the hell did one fund manager to acquire this much capital.

So the accusations are as follows, they:

1. Falsified records to lenders to get access to these borrowed funds

2. The lenders didn't do proper due diligence

3. Told OTC desks they head deals and relationships in place that they didn't

4. Submitted fake trading records to lending desks

5. Took money they managed for DEFI projects as they managed their treasuries

The key passage from OTB328 pic.twitter.com/11tgobyBkN

— On The Brink (@OnTheBrinkCIV) June 25, 2022

Now these are serious criminal accusations and it seems like the overconfidence during the bull market allowed them to get away with it as so much money was flowing into shitcoins and risk was discounted to zero.

As the truth is coming to light we are getting to see the rampant fraud that was propping up this house of cards known as DEFI and CEFI and with so many high-net-worth individuals on the hold for this, you can bet there will be regulators coming in to try and protect future customers from getting involved in services that use services like this.

There is room for wild cat banking I will admit that, but rampant scams and frauds are not one of them.

I will be keen to see how this story, Celsius, Luna, and the rest all end, and what the fallout will be from these scams.

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