Key points:
- Three Arrows Capital Falls into Liquidation
- The Crypto Hedge Fund Had Defaulted on Loan
- Another Chill for the Crypto Winter and Freeze!
The crypto hedge fund Three Arrows Capital (3AC) has fallen into liquidation with a British Virgin Islands court ordering its assets to be liquidated. This comes after the prominent, Singapore-based firm defaulted on a loan worth more than $670 million earlier this week. This comes on the back of severe stresses in the cryptocurrencies industry created by an aggressive bear market that has seen trillions of US Dollars wiped off of the value of crypto sector in 2022. This has seen a crypto freeze in withdrawals by some cryptocurrency exchanges and is all part of a potentially bigger and longer crypto winter!
Three Arrows Capital Falls into Liquidation
Three Arrows Capital, the crypto hedge fund that has been in distress for some weeks has been ordered into liquidation by a court in the British Virgin Islands. This is a consequence of growing lawsuits from creditors demanding repayment of the loans they made to 3AC. Partners from Teneo. a consultancy firm in the British Virgin Islands had been appointed to oversee the liquidation, according to Sky News.
Also Read: How Will Cryptocurrency Perform During A Recession?
The Crypto Hedge Fund Had Defaulted on Loan
The recent crisis at Three Arrows Capital has highlighted the growing issue within the crypto industry. Earlier this week Voyager Digital, a digital asset brokerage issued a default notice on a massive loan worth at least $670 million as it appeared there is no resolution in sight for their financial struggles. This comes on the back of a failed investments by 3AC in the collapsed Luna token to the tune of $200 million, alongside losses associated with the Axie Infinity hack and the troubled cryptocurrency exchange BlockFi.
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Another Chill for the Crypto Winter and Freeze!
This development for Three Arrows Capital is another chill for the crypto industry that has been moving into a crypto winter throughout this year. The bear market has created a domino effect, akin to an old-fashioned run on banks, as the over leveraged and somewhat incestuous sector has seen exchanges have to suspend client withdrawals as part of a crypto freeze, as we highlighted recently in our post New Coinflex Coin Issued in Wake of the Crypto Freeze. The liquidation of 3AC could trigger another wave of price losses across the cryptocurrency markets as yet another domino falls!