Three Arrows Gives Crypto Another Try”: Three Arrows is taking another shot at the crypto market. Find out what this means for you.
Three Arrows Gives Crypto Another Try
In the world of crypto, it is possible to borrow money against collateral that is extremely risky and transparently worthless.
Sam Bankman-Fried, on a podcast, once said that in crypto you can build a box and issue tokens from the box and “put [the] token in a borrow lending protocol and borrow dollars with it.” This demonstrates the faith that people have in crypto finance.
And we have talked about how Bankman-Fried’s FTX crypto exchange did more or less exactly that, borrowing billions of dollars of customer money against its stash of made-up tokens and not giving the money back.
And we have talked about how Kyle Davies, one of the founders of crypto trading firm Three Arrows Capital, or 3AC, convinced people to lend him hundreds of millions of dollars to do crypto “arbitrage” trades that were just, like, buying speculative tokens of new crypto ico projects and holding them, rather than actually buying and selling cryptocurrencies.
The innovations in 3AC’s business model were:
- Calling wildly risky venture-type investments “arbitrages,” so that lenders would assume they were safe, and
- Finding some really gullible lenders.