NEXO, tokens of cryptocurrency lending platform Nexo, have tanked 25% to trade at $0.61 as crypto traders fear that the DeFi platform may have an exposure to Three Arrows Capital.
The firm has refuted the claims saying it has 100% liquidity to meet its debt obligations. The firm added that its partnership with 3AC in 2021 never took off.
Three Arrows Capital, 3AC, has recorded liquidations of at least $400 million, with on-chain data showing that the firm has a minimum debt of $183 million against a collateral position of $235 million.
The news comes as traders fear that DeFi and CeFi firms, which offer high yields on client’s deposits, may default on their debt obligations due to about $1.5 trillion liquidation in the crypto space.
The market panic has further been aggravated after Celsius Network paused withdrawals, transfers, and swaps, citing extreme market conditions. Clients have since withdrawn about 50% of their assets from the platform since October leaving about $12 billion as of May.