Three Arrows Capital, a major cryptocurrency hedge fund, has gone bankrupt, according to reports quoting people familiar with the situation, making it one of the greatest casualties of the last so-called “crypto winter.”
Teneo was brought on board in the final few days to handle the liquidation process, according to the individual, who asked to remain anonymous because they were not permitted to discuss the topic publicly.
Sky News broke the story of the liquidation first.
There were no comments on the issue from Three Arrows Capital, or 3AC as it is also known.
Teneo is in the early stages of liquidation, according to the source. According to the source, the restructuring business is taking efforts to realise the assets that 3AC possesses, and then it will build up a website in the next day or two with instructions for how creditors can get in touch to make any claims.
3AC, co-founded by Zhu Su and Kyle Davies, is a famous crypto hedge fund (which focuses on investments in digital assets such as cryptocurrency) recognised for its highly leveraged bets. Zhu believes bitcoin is incredibly valuable.
However, a drop in digital currency pricing, which has seen billions of dollars wiped off the market in recent weeks, has harmed 3AC and exposed the company’s liquidity crisis.
On Monday, 3AC defaulted on a loan from Voyager Digital consisting of $350 million in USDC, the US dollar-pegged stablecoin, and 15,250 bitcoin, which is worth approximately $304.5 million at today’s values.
3AC was exposed to the defunct algorithmic stablecoin terraUSD and its companion cryptocurrency luna.
According to persons familiar with the case, US-based crypto lenders BlockFi and Genesis liquidated some of 3AC’s investments early this month, according to the Financial Times. 3AC borrowed from BlockFi but was unable to meet the margin requirement.
A margin call occurs when an investor is required to commit additional funds in order to avert losses on a deal done with borrowed funds.
The unravelling of 3AC has aroused concern in areas of the market that could be exposed to the corporation.
Other cryptocurrency firms have also had liquidity concerns. Customers’ withdrawals were halted by lending firm Celsius and bitcoin exchange CoinFlex, both citing “extreme market conditions.”
CoinFlex, on the other hand, had another issue with a customer who refused to clear a $47 million bill, causing the company to run out of cash.
(Adapted from SkyNews.com)