Three Arrows Capital (3AC), a large crypto hedge fund that held $10 billion in assets at one point, has been forced into liquidation according to a report.
Earlier this week, Voyager Digital (TSX: VOYG) (OTCQX: VYGVF), a digital asset firm that lent over $650 million to 3AC, announced that the loan to 3AC had gone into default. The loan was separated into 15,250 Bitcoin (~$308 million) and $350 million (USDC). Voyager said it would pursue recovery from 3AC and is in discussions with the company’s advisors as to legal remedies available.
According to SkyNews, 3AC has been ordered by a court in the British Virgin Isles to liquidate. 3AC while based in Dubai but is regulated in Singapore.
We are in the process of communicating with relevant parties and fully committed to working this out
— 朱溯 (3/AC) (@zhusu) June 15, 2022
Questions emerged about 3ACs ability to operate when founder Su Zhu posted a rather vague tweet stating they were reviewing options alluding to financial difficulties. Since the Tweet, 3AC has been relatively silent on their challenges.
3AC forced to change name to OAC after forced liquidation. (No arrows left for those not following).
— Jason A. Williams (@GoingParabolic) June 29, 2022
The collapse of 3AC and the expectation that Celsius, a large crypto lender and yield generator, will soon announce a similar outcome following the announcement it has frozen all withdrawals. All of these events have risen concerns that crypto contagion is at hand. Meanwhile, some firms like BlockFi have found a white knight – FTX founder Sam Bankman-Fried – to shore up its balance sheet to better deal with tanking crypto markets and heightened volatility. All of this will propel policymakers to move more quickly to regulate crypto platforms. Recently, a top Singapore Minister stated that cryptocurrencies are “unsuitable for retail investment” due to the speculative nature and volatility of the asset class.
