Crypto Hedge Fund Three Arrows Capital Declares Bankruptcy
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- Three Arrows Capital filed for Chapter 15 bankruptcy in the Southern District of New York last Friday.
- The bankruptcy of Three Arrows Capital (3AC) was seen as an example of how dangerous volatility can be.
- El Salvador has increased its investment in bitcoin despite a terrible bearish trend in the market.
The Singapore-based crypto hedge fund company “Three Arrows Capital” filed a petition for bankruptcy in New York on July 1. The British Virgin Islands court issued a liquidation order for Singapore-based cryptocurrency, a hedge fund, Three Arrows Capital on June 27, 2022. Three Arrows Capital, also known as (3AC), a cryptocurrency hedge fund. They filed for Chapter 15 bankruptcy in the Southern District of New York last Friday.
3AC Fails to Repay $80 Million Debt to Deribit
This was seen just days after 3AC was thrown into insolvency in the British Virgin Islands. 3AC failed to repay an $80 million debt to Deribit. However, the Chapter 15 bankruptcy was seen as a step that protects a company’s US assets. Furthermore, it stops creditors from seizing assets in the US.
It is worth noting that 3AC managed around $10 billion in assets. In April, that amount dropped to $3 billion. However, the US bankruptcy case was filed. This way, the American assets of 3AC could be protected by the lawyers in charge of liquidating the company in the British Virgin Islands.
Three Arrows Capital Declares Bankruptcy
Certainly, the bankruptcy of Three Arrows Capital (3AC) was seen as an example of how dangerous volatility can be. The volatility in the cryptocurrency markets has thrown some of the most well-known participants in the field off guard.
The cryptocurrency broker Voyager Digital suspended all transactions, deposits, and withdrawals. This action came following news that 3AC had defaulted on a $670 million loan it had received from the company Voyager Digital.
Three Arrows Capital Shakes the Market
On Friday, Voyager Digital, a cryptocurrency broker, announced that it has temporarily stopped processing trades, deposits, withdrawals, and loyalty points. In an interview with the WSJ, Davies and Zhu explained that the company had lost out on a $200 million investment following the crash of Luna and its twin cryptocurrency, TerraUSD, in May.
Thus, the massive collapse of the cryptocurrency hedge fund Three Arrows Capital has shaken the market for digital assets and caused bitcoin’s price to fall by a record amount.
On the other hand, El Salvador has increased its investment in bitcoin despite a terrible bearish trend in the market that has dropped the cryptocurrency’s value by half. El Salvador’s president, Nayib Bukele, tweeted last week that his country has purchased more than 80 BTC at almost $19K. Even so, this news hasn’t yet significantly influenced the market.
