One of the more well-known cryptocurrency hedge funds that encountered problems as a result of the recent market sell-off in the digital currency space is Singapore-based Three Arrows Capital (3AC).
A British Virgin Islands court ruled that Three Arrows Capital (3AC) should be liquidated. Three Arrows Capital was a cryptocurrency hedge fund that made large bets on several digital assets, including Bitcoin and the failed Luna tokens, before succumbing to a $2 trillion market crash.
On Monday, cryptocurrency broker Voyager Digital sent Three Arrows Capital (3AC) a default notice for failing to repay a loan of 15,250 bitcoin (about $324 million) and $350 million in USDC, a stablecoin.
Two partners at consulting and advisory firm Teneo have been selected by the court to oversee the liquidation, according to a source familiar with the situation who declined to be named because the information is confidential and the court issued the order on Monday.
The co-founder of 3AC attempted to address liquidation rumors on June 15 in a tweet, saying the firm was “fully committed to working this out” without providing any other information.
According to the source, Teneo will be in charge of negotiations with prospective purchasers who would be interested in purchasing Three Arrows’ remaining assets, such as tokens or equity stakes in cryptocurrency firms. To locate creditors and ascertain who is due what, a website will be created. According to its website, Three Arrows has invested in a variety of decentralized financial platforms like Aave and dYdX as well as crypto infrastructure companies like StarkWare.
There is currently no information on which or how much of these holdings will be sold.
The British Virgin Islands serve as the jurisdiction for the Three Arrows Fund. If a firm is deemed insolvent there because it is unable to pay its debts, the Commercial Court issues an order for its liquidation. Companies can also choose to liquidate themselves, though this is less typical.