Billions of dollars have been erased from the value of the cryptocurrency market in the past few weeks. Companies in the industry are feeling the pain. Lending and trading companies are facing a liquidity crunch and many companies have announced layoffs.
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Major crypto hedge fund Three Arrows Capital has been liquidated, a person familiar with the matter told CNBC, marking one of the biggest losses in the recent so-called “crypto winter.”
The person, who asked not to be identified because he was not authorized to discuss the matter publicly, said Teneo had been brought on board the ship in the past few days to deal with the liquidation.
Sky News first reported Filter story.
Three Arrows Capital, or 3AC as it is also known, did not respond to a request for comment when contacted by CNBC.
The person said Teneo is in the early stages of the liquidation process. The source added that the restructuring company is taking steps to realize the assets that 3AC owns, and then will create a website in the next day or two with instructions on how to contact creditors to make any claims.
3AC, co-founded by Zhu Su and Kyle Davies, is One of the most prominent cryptocurrency hedge funds (Which Focus on investments in digital assets such as cryptocurrencies) around which are known for their highly leveraged bets. Zhu has a very bullish view of Bitcoin.
But the slump in cryptocurrency prices, which has seen billions of dollars wiped off the market in recent weeks, has hurt 3AC and exposed a liquidity crunch at the company.
Monday, 3AC You defaulted on a loan from Voyager Digital It consists of $350 million in a stablecoin pegged to the US dollar, USDCand 15250 BitcoinIt is valued at approximately $304.5 million at today’s prices.
3AC was hit by the collapsed algorithmic stablecoin terraUSD and its sister token, Luna.
The financial times It reported earlier this month that US-based crypto lenders BlockFi and Genesis have liquidated some 3AC positions, citing people familiar with the matter. 3AC borrowed from BlockFi but was unable to meet the margin call.
A margin call is a situation in which an investor has to allocate more funds to avoid losses in a transaction made with borrowed money.
3AC’s disintegration raised fears of contagion to parts of the market potentially exposed to the company.
Other crypto companies have also faced liquidity issues. Lending company Celsius and crypto exchange CoinFlex was Had to pause customer checkouts Both cited “harsh market conditions”.
However, CoinFlex had another problem with a client Failed to pay debts of 47 million dollarswhich creates a liquidity problem for the company.