Crypto hedge fund Three Arrows Capital – also called 3AC – filed for Chapter 15 bankruptcy in New York on Friday, ending several weeks of speculation about its insolvency.
“The Debtor’s business has collapsed in the wake of extreme fluctuations in cryptocurrency markets.”
the filing read, noting
“to stay active efforts by individual creditors to seize assets and to preserve the status quo.”
3AC is another addition to the growing list of high-flying crypto firms the bear market has taken down. As per analytics firm Nansen, the decade-old investment fund had $10 billion worth of crypto assets under management just three months ago in March.
Things started spiralling downwards when crypto broker Voyager Digital halted withdrawals and trading on its platform, citing a delay in payments worth $646 million from 3AC. The broker went on to issue a notice of default last Monday.
Three Arrows Capital had borrowed large sums of money from several DeFi platforms, including Babel Finance, Celsius, and Voyager Digital – all of which have now frozen withdrawals for customers. But, it was unable to pay the debts due to the crypto market downturn.
On Wednesday, a British Virgin Islands court asked 3AC to liquidate because of its inability to pay off the loans. In addition, Singapore’s central bank, the Monetary Authority of Singapore (MAS), reprimanded the hedge fund for misleading it with inaccurate and false information.
Three Arrows Capital was established in 2012 by two former Credit Suisse traders & crypto billionaires, Su Zhu and Kyle Davies. The firm made a mark for itself in crypto-related ventures by being among the early investors of Bitcoin, Ethereum, and Solana.
However, 3AC suffered huge losses due to the startling collapse of Do Kwon’s TerraUSDT, and the recent carnage of crypto prices.