Alert: a cryptogiant in agony! Three Arrows Capital in trouble after colossal loan

On June 27, 2022, the hedge fund crypto Three Arrows Capital, which has been struggling with the decline in cryptocurrencies for some time, was given a $670 million loan default. Indeed, the digital asset brokerage firm Voyager Digital issued a press release Monday morning 27 explaining that Three Arrows Capital failed to repay a $670 million loan. The hedge fund was known to have struggled since the collapse of the stable currency TerraUSD and LUNA cryptocurrency. It is one of the largest crypto funds in danger of bankruptcy. Another blow to the crypto ecosystem…

670 million debt for Three Arrows Capital

Three Arrows Capital is a well-known crypto hedge fund. He is a dying giant and the symbolism is strong in these lean times for cryptocurrencies. The news was reported by Voyager Digital, a digital asset broker. In particular, it stated that 3AC (Three Arrows Capital) had a $350 million loan in stable currencys USDC and 15,250 bitcoins (BTC), worth about $320 million at the end of June 2022.

What is Three Arrows Capital and how did they get there?

It is one of the largest crypto hedge funds. Three Arrows Capital was founded in 2012 by Zhu Su and Kyle Davies. Three Arrow Capital’s troubles appeared to begin in early June 2022. Zhu Su first tweeted a message saying that the company ” communicate with relevant parties “. And she was fully committed to solving this problem In addition, the fund was exposed to LUNA and the collapse of the token, as well as the stable currency UST. This subsequently set off a downward spiral. 3AC co-founder Kyle Davies told the Wall Street Journal in an interview in early June: The Terra Luna situation caught us by surprise

Three arrows capital of the way of the cross

3AC’s ill health was well known. Rumors were circulating and information was recently confirmed. In June 2022, the company even called on financial experts to help find a solution to the massive losses it had suffered. Faced with such a situation, the company wanted an extension of the collection deadline for its creditors to consider all possible options. In this case, two options seemed possible. Namely, the sale of its assets or a takeover by another company.

3AC’s solvency crisis is due to crypto market collapse

3AC’s solvency crisis comes after weeks of turmoil in the cryptocurrency market. This crisis has devalued the market by hundreds of billions of dollars. Indeed, the cryptocurrency market, which was valued at $3 trillion at its peak in 2021, now stands at $950 billion. More than $2,000 billion has evaporated. This is the biggest crisis in cryptos by value. And probably one of the biggest challenges the crypto industry will have to overcome. The triggering event, the collapse of the UST, has recently led to new explanatory hypotheses. This crisis can be the direct action of a malicious group or person.

Creditors’ Response to Three Arrows Capital

In particular, the Voyager broker stated that he intended to pursue 3AC recovery. In the meantime, the broker stressed that the platform will continue to operate and continue to execute client orders and withdrawals. The company wanted to reassure. Probably an attempt to tame a wave of fear across the crypto ecosystem. † We are working diligently and quickly to strengthen our balance sheet and explore options to continue meeting clients’ liquidity needs said Stephen Ehrlich, Voyager’s CEO.

A precarious situation facing the pressure of liquidity demand

The company said it has approximately $137 million and owns crypto assets. The company also noted that it has access to $200 million in cash and USDC revolving credit, as well as a 15,000 bitcoin (about $311 million) revolving credit from Alameda Ventures. Last week, Alameda (the trading company of FTX founder Sam Bankman-Fried) pledged $500 million in financing to Voyager Digital. Voyager Digital has already drawn $75 million from this line of credit. † Absence from 3AC does not lead to absenteeism in accordance with Alameda according to the Alameda statement.

This event, if symbolic, is probably the first domino in a dramatic series. The loss of nearly two-thirds of the value of cryptocurrencies will lead to the default of potentially dozens of companies. Some are already experiencing liquidity crises as a result of the market crash. This month, lender Celsius, which promised users very high returns for depositing their digital currencies, suspended withdrawals for customers.She claims ” extreme market conditions Another cryptocurrency lender, Babel Finance, said that this month facing unusual liquidity pressures and stopped shooting. Lack of trust and loss of value can create a vicious circle that could spell the end of many crypto funds.

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Gregory Morat avatar

Gregory Morat

Student passionate about entrepreneurship and fascinated by the technologies behind cryptos! Yes, I am convinced that the two are closely linked: blockchain and NFTs are revolutionizing many sectors and offering unprecedented opportunities.

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