A British Virgin Islands court has ordered major cryptocurrency hedge fund Three Arrows Capital (3AC) to liquidate its assets as the serious market downturn in digital assets continues.
The liquidation has been ordered by a British Virgin Islands court, with Teneo Restructuring being brought in to deal with the liquidation process. Teneo is in the very early stages of the liquidation process. The restructuring firm is taking steps to realise the assets 3AC has, then it will set up a website in the next day or two with instructions for how creditors can get in touch to make any claims.
Liquidation refers to the formal shuttering of a business due to its inability to pay off debt and other financial obligations. Whatever assets the company holds are then sold off piecemeal to various creditors with outstanding loans. It is currently unclear exactly which firms will see their claims filled and when.
This is said to be one of the biggest casualties of the “crypto winter”, following catastrophic black swan events such as Terra’s algorithmic stablecoin UST, and Celcius’ current financial troubles that are continuing to brew.
Rumours of the fund’s unravelling began following the implosion of Terra and its algorithmic stablecoin UST back in May.
3AC suffered a serious loss of roughly $200 million following the project’s collapse, with Davies telling the Wall Street Journal that “the Terra-Luna situation caught us very much off guard.”
Cryptocurrency broker Voyager Digital issued 3AC with a default notice on Monday after it failed to make payments on a loan of 15,250 bitcoin (approximately $324 million) and $350 million worth of USDC, a stablecoin.
Additionally, as the market continued to plummet, crypto exchanges BitMEX, FTX, and Deribit also liquidated 3AC’s positions after the crypto fund failed to meet margin calls.
On June 15, 3AC’s co-founder sought to address liquidation rumours in a tweet, saying the company was “fully committed to working this out”, without going into further detail.
Digital asset markets have fallen by more than $2 trillion since last fall, erasing about two-thirds of the industry’s total market capitalisation.
Today, Bitcoin is hovering near $20,000 a coin, a steep 70% drawdown from last November’s peak of $69,789.
