A British Virgin Islands court has ordered the liquidation of hedge fund Three Arrows Capital and all assets held by it. The ruling came shortly after 3AC announced its inability to repay a debt of 15,250 BTC and 350 million USDC owed by Voyager Digital.
According to confidential information accessed by Sky News reporters, the Singapore-based fund founded by Su Zhu and Kyle Davies is to work with Teneo Restructuring Limited, a bankruptcy and insolvency assistance firm. While details of the liquidation process are not publicly available, 3AC’s “restructuring” is said to involve liquidating all assets and paying off creditors.
Three Arrows Capital was until recently one of the largest hedge funds investing in digital assets. With the market crashing and Bitcoin falling into the $20,000 area, 3AC failed to replenish deposits from its lenders – mostly BTC borrowed from BlockFi – which ultimately led to its insolvency.
Rumors about the fund’s solvency troubles started circulating online about a month ago. However, its co-founders assured that they were “working on a solution to this situation” and did not hesitate to inform everyone about the fact that 3AC has one foot in the grave.
Today, all indications point to the fact that 3AC’s bosses were well aware of what was coming and were trying to stall. The call for payment of the debts incurred by broker Voyager Capital proved to be the nail in the coffin and proof that 3AC is insolvent.
The liquidation of Three Arrows Capital will undoubtedly have a very big impact on the entire cryptocurrency market. While it is hard to say how the whole incident will affect prices, it is certain that the collapse of such a large player will raise a wave of questions about regulation and calls for oversight of digital assets by regulators.