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Crypto: 3AC owes $27m to Polkadot’s Moonbeam Foundation

According to court documents, the bankrupt fund, Three Arrows Capital, owes the Polkadot developer, Moonbeam Foundation, over $27 million.

Recent court documents show that crypto fund Three Arrows Capital (3AC) owes blockchain development lab Moonbeam Foundation more than $17 million in stablecoins and $10 million in tokens issued by Moonbeam.

The loan was closed in September 2021, with a 12% interest rate accepted by Three Arrows Capital (3AC).

A letter sent in June already stated the Moonbeam Foundation’s intention to recover the stablecoin loan amounts:

“We reiterate our request for immediate repayment of the principal of our two outstanding loans (US$7MM and US$10MM),”

A conflict of interest with a particular Three Arrows position at Moonbeam?

An interesting point raised by these recent court documents concerns the relationship between Three Arrows Capital (3AC) and Moonbeam. Alongside the various loans, 3AC was also engaged by Moonbeam as a ‘liquidity consultant’ for the network’s moonriver (MOVR) and glimmer (GLMR) tokens.

Under the terms of the liquidity consultation, Three Arrows Capital (3AC) was instructed by Moonbeam to make “commercially reasonable efforts to open new markets” for both tokens, with the fund also conducting “market analysis” and suggesting new “appropriate exchanges” on which the tokens could be traded.

However, 3AC was not responsible for “final performance” and had no specific trading volume targets. The obligations were “limited to making commercially reasonable efforts to advise on methods to increase the liquidity” of the river and glimmer tokens.

3AC held over 10 million GLMR tokens and 200,000 MOVR tokens worth over $10 million at current market rates. These have not been returned to Moonbeam at this time.

Instead, the documents show that Moonbeam paid 3AC $90,000 as a semi-annual staggered fee for consulting services.

This kind of dual relationship seems to be commonplace in the crypto ecosystem and could be one of the reasons why the downfall of large companies can quickly prove catastrophic for much of the ecosystem, as projects are so interconnected.

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