Major Crypto Hedge Fund Three Arrows Capital Files for Bankruptcy and Fires 25% of Workforce
upstart writes:
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
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