3AC Ordered to Liquidate
- 3AC suffered huge losses following Terra’s decline.
- The Singapore-based firm was one of the standout firms in the bull market.
According to recent reports, Singapore-based group, Three Arrows Capital has been directed to liquidate. The cryptocurrency-focused hedge fund has entered liquidation, intensifying the problem gripping the world’s market for digital assets. Reports state that partners from Teneo in the British Virgin Islands have been lined up to handle the bankruptcy of the company.
A firm is said to have gone into liquidation when it is unable to meet its financial responsibilities. So, such an organization has to sell any assets it has in sections to different creditors. 3AC was one of the blockchain-focused organizations that enjoyed the spotlight during the 2021 bull market. The immediate financial repercussions for the creditors of Three Arrows are currently unknown but
3AC’s failure is a huge blow to the entire industry.
How it Went Wrong for 3AC
The collapse of Terra and its algorithmic stablecoin UST early last month sent shock waves through the crypto industry. It also marked the beginning of crises for other platforms such as 3AC. Rumors began to spread in late May that the firm had run into trouble and had suffered a huge loss.
Reports later revealed that 3AC suffered a loss of almost $200 million after Terra’s failure. 3AC’s Davies confessed that the situation with Terra was completely unforeseen and had caught his organization off guard. Things got worse for 3AC after it failed to fulfill the margin call. As a result, FTX, BitMEX, and Deribit sold out 3AC’s positions.
A further $661 million in exposure to the fund was disclosed by cryptocurrency broker Voyager Digital when more open positions came to light. Reports state that the loan comprised $350 million in USDC and 315,250 Bitcoin. However, Voyager sent a notice of default after 3AC once more failed to pay the broker.
The 3AC Crisis Leads to Massive Scare
Users of Terra, 3AC, and Celsius never anticipated that these projects would face such sad endings. However, the collapse of these tokens has led to massive fear in crypto users over the security of several platforms. Data shows that the market sentiment is currently extreme fear meaning people are selling off their assets out of fear of losing.
Many crypto users are presently battling the fear of another major collapse that might harm their earnings and investments. Others are said to be troubled by the current losses incurred by hackers and fraudsters. The need for more enhanced security has never been as urgent as it is now.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
