Three Arrows Capital, a cryptocurrency hedge firm, declares bankruptcy as the market collapse takes its toll.
One of the largest victims of the most recent "crypto winter" is the large cryptocurrency hedge fund Three Arrows Capital, which has gone into liquidation, according to a source with knowledge of the situation who spoke to CNBC.
The insider, who asked for anonymity because they were not permitted to discuss the situation publicly, claimed that Teneo was just brought on board to handle the liquidation process.
When approached by CNBC, Three Arrows Capital, or 3AC as it is often called, declined to comment.
The insider stated that Teneo is still very early in the liquidation process. The restructuring company is moving to realize the assets that 3AC possesses, and in the next day or two, it will launch a website with information on how creditors can contact the firm to submit any claims.
One of the most well-known crypto hedge funds (which concentrate on investments in digital assets like cryptocurrencies) is 3AC, co-founded by Zhu Su and Kyle Davies, and is renowned for its highly leveraged bets. Zhu holds fervently enthusiastic opinions about bitcoin.
However, a drop in the value of digital currencies that has seen billions of dollars wiped off the market in recent weeks has damaged 3AC and made the company's liquidity crisis public.
On Monday, 3AC fell behind on a loan from Voyager Digital consisting of $15,250 in bitcoin, or roughly $304.5 million at the time of writing, and $350 million in USDC, a stablecoin pegged to the US dollar.
The algorithmic stablecoin terraUSD and sibling token luna were exposed to 3AC.
According to persons familiar with the situation, the Financial Times earlier this month claimed that American crypto lenders BlockFi and Genesis sold some of 3AC's holdings. Despite borrowing money from BlockFi, 3AC was unable to satisfy the margin call.
A margin call occurs when a trader who used borrowed money must provide additional money to prevent losses.
Concerns about 3AC spreading its problems to other markets have been raised by the company's demise.
There have also been liquidity problems for other bitcoin businesses. Both the cryptocurrency exchange CoinFlex and the lending company Celsius were had to halt customer withdrawals due to "extreme market conditions."
CoinFlex, on the other hand, ran into another issue with a client who didn't pay back a $47 million loan, which caused a liquidity issue for the business.
Source: CNBC