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Three Arrows Capital Gets Liquidation Order from BVI Court

Legal

www.financemagnates.com 29 June 2022 08:53, UTC
  
Reading time: ~2 m

A court in the British Virgin Islands (BVI) has ordered the liquidation of Singapore-based Three Arrows Capital (3AC), a cryptocurrency-focused hedge fund, according to a Sky News report.

Though there is no official confirmation, the court order was issued on June 27, and partners from Teneo Restructuring were tasked with the insolvency process. However, the implications to the creditors of the company are still unclear.

Established in 2012 by Su Zhu and Kyle Davies, 3AC is one of the most prominent cryptocurrency hedge funds, and is known for its high leveraged positions.

The worries of 3AC started with the recent cryptocurrency market downturn. It incurred a loss of at least $400 million earlier this month.

Loan Default

The fund also defaulted on a more than $670 million loan recently. According to a notice issued by Voyager Digital on Monday, the fund did not repay the loan, $350 million of which were in USD-pegged stablecoin USDC and another 15,250 bitcoin, which is valued at around $320 million.

Voyager further clarified that it is intending to pursue recovery from the crypto fund.

“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” Voyager’s CEO, Stephen Ehrlich said.

The liquidation of 3AC might have deep implications in the cryptocurrency market, where many companies are taking aggressive risks with a bullish stance on digital currency prices. 3AC founder Zhu himself is a major proponent of Bitcoin and last year predicted the price of the token could be $2.5 million per coin. However, he tweeted last May that his “supercycle price thesis was regrettably wrong.”

Meanwhile, Bitcoin is again testing the support at $20,000, as of press time, as bearish sentiment gripped the market again.


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