Three Arrows Capital (3AC), a hedge fund based in Singapore, failed to meet margin calls and witnessed some of its positions liquidated on the weekend.
The Crypto crash has forced lenders to significantly mitigate the credit amount they’re willing to provide, and the failure of a popularly known bullish company to add extra funds. It clearly seems to be struggling to compensate for its losses.
BlockFi, a US-based firm, is reportedly among the lenders that liquidated 3AC assets. According to the sources, the firm mitigated its exposure by taking collateral the fund had rejected to back its borrowing.
According to the reports, two years back, Three Arrows created a “strategic investment” in BlockFi, borrowing Bitcoin from the lender. However, 12 months later it exited.
Though it is not clear yet what collateral 3AC posted for its loan. However, as per the rumors what it’s borrowing against are the shares of Grayscale Bitcoin Trust (GBTC).
It is further reported that exchanges such as Deribit, FTX, and BitMEX have reportedly liquidated the positions.
Responding to the latest claims, Su Zhu, the co-founder of 3AC, in a tweet said that they are currently communicating with relevant parties and are actively pursuing this to work out.
Zac Prince, the CEO of BlockFi, too published a tweet on Thursday saying that purposely refers directly to its action against 3AC.
Three Arrows and its founders, Zhu and Kyle Davies always had a bullish stance on crypto. Zhu even called Bitcoin potentially “one of the key reserve currencies of people and nations.” And, even before that Zhu promoted Dogecoin because of its features like ease to understand for “blue-collar traders.”
But this time the ‘go big or go home approach has left firm high and dry.
David Siemer, the Financial chief at Wave, said that they used to be quite big and active and went into some big positions.
In recent months, the fund put its confidence in various tokens, however, they failed disastrously.
Solana, Axie Infinity, Avalanche, and Luna, are among the assets which went down the drain in May, taking the market along with them.
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Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/06/18/heres-what-led-to-the-liquidation-of-three-arrows/