Three Arrows Capital, a cryptocurrency-focused hedge fund, has plunged into liquidation, deepening the crisis engulfing the global digital assets sector.
Sky News has learnt that partners from Teneo in the British Virgin Islands has been lined up to handle the insolvency of the Singapore-based firm, which was set up in 2012 by Su Zhu and Kyle Davies.
Cryptocurrency insiders said on Wednesday that the liquidation would be a significant moment in the current unravelling of the cryptocurrency sector, which has grown at breakneck speed in recent years.
The firm's demise is likely to raise further questions, however, about the regulatory oversight to which cryptocurrencies and other digital assets are subject in the world's major financial centres.
[...] The crypto landscape is experiencing tumultuous change amid a collapse in valuations of assets such as stablecoins - digital currencies pegged to the value of assets such as the US dollar or gold.
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The news for cryptocurrencies keeps getting worse as Three Arrows Capital (3AC), a major cryptocurrency hedge fund, plunges into bankruptcy and fires 25% of its workforce.
Rumors that the embattled fund was in trouble started gaining steam early last month, and it was hit hard by the collapse of the Terra crypto and other issues. A court order in the British Virgin Islands ordered their liquidation after they defaulted on a loan worth $660 million to crypto brokerage Voyager Digital.
[...] 3AC is one of the most prominent cryptocurrency hedge funds, focusing on investments in digital assets, and it is known for bullish views on bitcoin and highly leveraged bets. It was founded by Kyle Davies and Zhu Su, who is now trying to sell the $35 million mansion he bought in December.
The collapse of Three Arrows Capital has sent shockwaves throughout the crypto lending market, with countless firms now racking up significant losses as a result of their exposure to the fund.
[...] The conditions have led experts to conclude the crypto space is dealing with its first wide-scale credit crisis. IntoTheBlock Head of Research Lucas Outumoro wrote: "Institutions led by their risky practices thrived during the bull market, but were exposed as prices crashed and took down the rest of the crypto space with them. Ultimately, as an industry, crypto ended up learning the same lessons from traditional finance from its first debt crisis." Are you jumping in when it bottoms out?
Having a need for a $660M loan is surprising in itself, but more surprising to me is having another crypto fund step up and loaning them that much and putting their own business at risk. Is this the start of a major collapse, or just a "market correction," as the economists like to say?
See previously: Crypto Hedge Fund Three Arrows Capital Plunges Into Liquidation
(Score: 2) by DeathMonkey on Thursday June 30 2022, @04:39PM (1 child)
Well if you wanted to buy crytpo now is probably the time!
(Score: 2) by cmdrklarg on Thursday June 30 2022, @09:05PM
Sure, and still lose money when it inevitably becomes worth nothing. No thank you.
The world is full of kings and queens who blind your eyes and steal your dreams.
(Score: 2) by ilsa on Thursday June 30 2022, @05:22PM (1 child)
So not just crypto, not just hedge fund, but a crypto hedge fund.
It's like they researched all available financial instruments available today and specifically chose to glomp onto the worst, most offensive ones available.
I want to say I hope every single person involved, whether employee or investor, got beggared for their troubles, but these slimes always managed to squeak out in some way.
(Score: 2) by EvilSS on Thursday June 30 2022, @09:50PM
(Score: 2) by tizan on Thursday June 30 2022, @05:49PM (2 children)
As Feynman said you cannot violate the laws of physics however much you wish it.
You make something out of nothing and obfuscate a pyramid scheme....its bound to collapse at some point back to nothing.
some people made money ..a lot lost money...sumtotal=0
(Score: 2, Informative) by Anonymous Coward on Thursday June 30 2022, @05:57PM
> some people made money ..a lot lost money...sumtotal=0
...and that's not saying anything about all the external costs: A few that come to mind,
CO2 in the atmosphere when miners use fossil fuel electricity
disruption in GPU market by crypto miners
high power bills for neighbors when miners dominated the local grid (and power had to be bought from outside)
noise of the mining operations (all that fan and AC noise the neighbors have to put up with)
... more??
(Score: 1) by khallow on Saturday July 02 2022, @12:25AM
What law of physics would be violated here? Sure, there's a massive case of expectation not meeting reality, but you don't have to go anywhere near physics to find failure.