The hedge fund Three Arrows Capital (3AC) has filed for bankruptcy in the United States Court, after the collapse of a series of leverage operations that made it impossible to pay creditors and made the company the most notorious victim of the so-called “winter crypto”.
In a document filed with the Bankruptcy Court of the Southern District of New York and obtained by multiple US media outlets, 3AC requests the protection of its assets through Code 15 of the relevant legislation in the country.
The order ends a week that marked the final stage of the fund’s demise. Last Monday, exchange Voyager Digital issued a notice of default of more than $670 million, referring to $350 million quoted in USDC stablecoin and another 15,250 in bitcoins.
The money had been borrowed to help pay margin calls to customers. The company faced difficulties in honoring commitments with several creditors, including BlockFi, as reported by the broadcastGrupo Estado’s real-time news system, last Wednesday.
After the default, a court in the British Virgin Islands ordered the liquidation of 3AC. The company was founded in 2012 in Singapore, but repatriated to the Caribbean tax haven as part of a plan to move headquarters to Dubai. On Thursday, Singapore’s central bank accused the fund of providing false information about asset management.
The episode marks the most dramatic sectoral consequence of the recent cryptocurrency tumble. Amid rising interest rates in developed economies, bitcoin has plummeted nearly 60% year to date and has seen its market value plummet from a peak of $3 trillion last year to around $900 billion.
For the head of research at Titanium Asset, Ayron Ferreira, a domino effect could spread through the market after the sunset of 3AC. “Greater drops in prices could result in more liquidations due to the insolvency that the fund goes through due to the leveraged exposure of loan protocols”, he warns.
In this scenario, around 3 pm this Saturday, bitcoin was down 0.97% to $19,267.50, ethereum was down 0.89% to $1,061.62, according to CoinDesk.
Source: CNN Brasil