THREE ARROWS GREAT STATE
Singapore-based crypto hedge fund Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy on July 1.
Once a formidable player in the digital asset space, 3AC’s downfall appeared to stem from the firm’s bet on the Terra ecosystem, which was behind the failed stablecoin terraUSD. This token lost almost all of its value in May, robbing the crypto market of nearly half a trillion dollars.
3AC was heavily indebted and unable to meet margin calls from counterparties from which it had borrowed. As a result, cryptocurrency lenders BlockFi and Genesis Trading liquidated their positions in the company. According to court documents, 3AC’s creditors claim they are owed more than $2.8 billion.
THE CELSIUS NETWORK
On June 12, New Jersey-based cryptocurrency lender Celsius suspended withdrawals and a month later filed for Chapter 11 bankruptcy, showing a 1.19% deficit. billion dollars on its balance sheet. It had been valued at $3.25 billion in a funding round in October.
Celsius stumbled upon complex investments in the wholesale market for digital assets. The company had lured retail investors by promising annual returns of up to 18.6%, but struggled to cope with redemptions as cryptocurrency prices crashed.
During its first bankruptcy hearing, Celsius’ lawyers said its bitcoin mining could be a way for the company to reimburse customers.
Meanwhile, several state regulators are investigating Celsius’ decision to suspend customer withdrawals, Reuters reported.
Crypto lender Voyager Digital, also based in New Jersey, had been a rising crypto star, reaching a market cap of $3.74 billion last year. But the collapse of 3AC was a blow to Voyager, which was heavily exposed to the hedge fund. Voyager has filed claims of over $650 million against 3AC.
Voyager filed for Chapter 11 bankruptcy on July 6, saying it had $110 million in cash and crypto assets. Since then, the US Federal Deposit Insurance Corp has confirmed that it is investigating Voyager’s marketing of deposit accounts for the purchase of cryptocurrencies, which the company advertised as FDIC insured.
Cryptocurrency exchanges FTX and Alameda Research, both founded by billionaire Sam Bankman-Fried, have offered to buy all of Voyager’s digital assets and loans except for its 3AC loan and allow customers Voyager to withdraw their assets from an FTX account. However, Voyager rejected the offer in a lawsuit, calling it a “low offer”.
On July 8, Singapore-based cryptocurrency lender Vauld filed a petition in a Singapore court for protection against its creditors after suspending withdrawals a few days earlier. The company owes its creditors $402 million, according to a report by The Block.
Vauld is backed by billionaire investor Peter Thiel’s Valar Ventures, Pantera Capital and Coinbase Ventures.
In a July 11 blog post, Vauld said she was discussing a possible sale to Nexo, a London-based cryptocurrency lender, while exploring potential restructuring options.
Facing increased withdrawals and a hit from 3AC, crypto lender BlockFi signed an agreement on July 1 with FTX that grants BlockFi a $400 million revolving credit facility and includes an option that allows FTX to buy the company for a maximum amount of $240 million .
BlockFi was hit hard by the cryptocurrency crash and implemented several cost-cutting measures in June, including cutting its workforce by 20% and cutting executive pay. The company was valued at $3 billion in a funding round last year.