Sunday, September 25, 2022

Three Capital Arrows Faces Liquidation as it Bows to Market Forces

Distressed cryptocurrency hedge-fund Three Capital Arrows has slipped into liquidation following the order of a court in the British Virgin Islands. This pronouncement was slammed on the Singapore-based firm earlier this week.

With Three Arrows Capital (which is fondly called 3AC) now declared insolvent, Teneon Restructuring – a financial advisory firm has been brought on board to handle the liquidation process. As a global financial advisor, Teneo is known to offer advisory services to both well-performing and distressed corporate bodies.

Although the liquidation process is still infantile, sources familiar with the process have said it will begin with the collation of assets.

“Teneo would start by collating all of 3AC’s assets, then guidelines on how to make claims would be put out for creditors,” the source said.

Before 3AC became insolvent, the hedge fund, which was founded by Zhu Su and kyle Davies, played majorly around crypto investment. The firm was also known for its super-leveraged bets and Zhu also earned a reputation as a Bitcoin maximalist.

Bitcoin and other cryptocurrencies however lost their footing, slumped far below predictions and spiked massive sell-offs across the market. This unprecedented plunge sent tremors across many crypto firms and investors, thereby resulting in the liquidity crisis we are seeing today.

A couple of days before 3AC became liquidated, the firm received notice of default from Voyager Digital.

The notice was to remind 3AC of its loan of 350 million USDC and 15,250 Bitcoin which it took from Voyager Digital. Voyager Digital also reported that it was in talks with its advisors on the best recovery path for the said loan.

Now with 3AC closing its shops, we can expect to have talks on regulation in the crypto industry become a burning issue. This would also pump some fresh perplexity into the veins of investors as they wonder who could be the next.

In contending with the current pressure facing the market, lending company Celsius has also placed a pause on withdrawals. The firm cited “extreme market conditions” as the reason for this decision, and hopes to reintroduce withdrawal once the dust settles.

Victoria Nye
A Blockchain columnist who is enthusiastic about developing a network interface between the real world and the cryptosphere.

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