According to a Sky News report on Wednesday, a judge has ordered Three Arrows Capital to be liquidated. If true, this move will exacerbate the turmoil that has plagued the crypto hedge fund and the crypto space as a whole over the past few weeks.

Based on the report, Teneo Restructuring partners in the British Virgin Islands have been hired to manage the insolvency of the Singapore-based company.

Earlier this month, rumors started circulating about the issue plaguing Three Arrows. The once-dominant hedge fund was badly hit by Terra’s bankruptcy and the resulting market contagion.

What is a liquidation?

Liquidation refers to the formal dissolution of a business due to its failure to fulfill its obligations. The company’s remaining assets are then auctioned off individually to creditors with outstanding loans.

The Wall Street Journal reported earlier this month that the struggling hedge fund was seeking a bailout deal after selling its assets.

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Three arrows hit with huge losses

Three Arrows, also known as 3AC, suffered significant losses during the recent severe decline in the crypto markets. After incurring at least $400 million in liquidations, the prospect of insolvency was announced in mid-June.

According to insiders, Teneo’s liquidation procedure has just started. The restructuring company is working to realize the assets of Three Arrows and will set up a website within days with instructions on how creditors can file claims, sources say.

The company said one of its divisions issued a notice of default to 3AC for its failure to repay a debt. The loan amount consists of 15,250 Bitcoin and $350 million in USDC, which equals approximately $660 million.

BTC total market cap at $382 billion on the daily chart | Source: TradingView.com

The 3AC shutter is not good news for crypto

Three Arrows was founded in 2012 in Singapore by former classmates Kyle Davies and Su Zhu.

The shutdown of one of the most influential cryptocurrency companies could add to the sector’s woes as it struggles to bounce back from a string of negative developments.

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Bitcoin is currently selling slightly above $20,000, down 3% over the past week, according to Coingecko statistics.

On Tuesday, 3AC defaulted on a loan from Voyager Digital consisting of $350 million in USDC, a US dollar-pegged stablecoin, and 15,250 BTC, which equates to approximately $304.5 million at Wednesday’s price. .

Featured image Westend61, chart from TradingView.com



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