3AC Has Filed For Bankruptcy. Here’s All We Know
- 3AC was ordered to liquidate its assets after failing to repay its loan.
Embattled crypto hedge fund, Three Arrows Capital, has reportedly filed for Chapter 15 bankruptcy in New York. The firm has since fallen from its previous peak and has been in a fight for survival. The fund once oversaw assets valued at $10 billion and served as a key hub for those involved in the cryptocurrency finance industry. But all that has changed as its insolvency has significantly disrupted the market. 3AC’s filing noted that, it intends to
to stay active efforts by individual creditors to seize assets and to preserve the status quo.
Companies usually file for chapter 15 bankruptcy in an attempt to protect the debtor’s assets and allow collaboration between global and U.S. court systems. The announcement comes after a British Virgin Islands court ordered the foreign company to liquidate and settle its debt after it defaulted on a $660 million loan to Voyager Digital.
Voyager recently suspended customer withdrawals and trading due to the unpaid loans. Numerous venture-backed crypto platforms are experiencing difficulties as a result of the 3AC’s continuous downfall. BlockFi recently signed a contract with FTX U.S., noting that it had lost over $80 million as a result of its dealings with 3AC.
Three Arrows Capital gained solid ground in the crypto space and was known for investing in multiple projects before it went bankrupt. Former Credit Suisse traders, Su Zhu and Kyle Davies launched the business in 2012, and it promoted positions in several of the biggest cryptocurrency projects and firms, including BlockFi, Solana, Bitcoin, Axie Infinity, and Ethereum.
Things got complicated for the firm following Terra’s decline. The Do Kwon-led platform’s algorithmic stablecoin, UST, destabilized and saw a sharp decline in value. 3AC reportedly suffered losses of almost $200 million. Since then, 3AC’s positions have been liquidated by FTX, BitMEX, and Deribit.
3AC seems to be the first of many platforms to take the bankruptcy route. Many crypto users expect the struggling Celsius to file for bankruptcy in the coming days.
Will These Events Trigger Regulation?
The string of collapses seen in the crypto market in recent weeks has further sparked concerns about crypto regulations. The decline of assets such as Bitcoin and Ethereum has also attracted the attention of the U.S government.
Many crypto users wonder how regulation will affect the industry. Some worry that such actions will reduce the core principle and nature of the crypto industry. But, experts such as Katherine Dowling, general counsel, and chief compliance officer for Bitwise Asset Management believe it might be good for the industry. Katherine believes regulation will create transparency and reduce crypto fraud which has become an almost regular scene in recent months.
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.
