Since the ongoing crisis in the crypto market, various companies have gone into liquidation. Some of these firms had invested in digital currencies that have crashed, such as Terra’s UST.
According to Sky News, BVI (British Virgin Islands) court has given an order to liquidate Three Arrows Capital (3AC). The company had allegedly invested its funds into the UST, which had collapsed.
The Singapore-based company was established by Kyle Davies and Su Zhu in 2012. Teneo partners in the BVI were asked to manage the firm’s bankruptcy.
Meanwhile, reports claim that the BVI gave the court’s order on the 27th of June. However, this action worsens the ongoing crisis in the crypto market on a global scale.
Uncertainty Surrounds Three Arrows Capital
Analysts and market participants believe this liquidation would have numerous effects. It could further weaken the already collapsing crypto sector. It can make regulators enforce stricter regulations for the crypto industry.
Presently, it is uncertain how the situation would turn out for 3AC. However, the firm’s bankruptcy issue might raise further concerns for other crypto hedge funds.
Meanwhile, Voyager Digital brought the situation of 3AC to light after notice from Voyager Digital. The crypto broker, Voyager Digital, was thinking of issuing a notice to 3AC regarding a loan.
On the 27th of June, Voyager Digital stated that it had sent a notice of default to the company. This was after it could not pay back the loan it had borrowed.
Voyager Digital had loaned over $350M USDC and 15,250 Bitcoin to 3AC. Other companies that gave 3AC loans include Bitmex, Nexo, and FTX.
Three Arrows Capital Sought For A Solution
Earlier in June, Davies had shown optimism that the crypto hedge fund would bounce back. He stated that:
“We are committed to ensuring that we find a lasting solution for the company’s situation. Also, we are considering all possible avenues to get 3AC out of bankruptcy.”
Furthermore, Davies said the firm might solicit funds from other firms or sell some assets. It is uncertain if the firm had started such negotiations before the latest news.
However, the recent court order spells doom for the crypto hedge firm. This could also cause a ripple effect on other companies currently on the brink of liquidation.
Moreover, it might raise concerns about the kind of regulation and monitoring of these firms. The regulations on digital currencies and other crypto products may become more stringent.