Three Arrows Capital, a crypto-based hedge fund that recently went bankrupt, owes upwards of $3.5 billion to multiple creditors, which include Blockchain.com, Voyager Digital, and crypto brokerage, Genesis Global Trading. The news came through Teneo when the firm asked to oversee 3AC’s liquidation process. After review, they released court-ordered documents that summarize the 3AC’s bankruptcy.
According to court filings, 3AC was unable to repay loans to creditors, was margin called multiple times, and failed to pay by the deadline. Since the company was margin called, its investment fell below the required level, and the brokerage opted to cut its losses to preserve the capital that was still available.
List of creditors – 3AC.
The entire dramatic history of this now infamous company, as well as an example of how one market player can dramatically affect the entire blockchain industry, is shown below… pic.twitter.com/RUqWu2MfFk
— Alt Crypto Gems (@AltCryptoGems) July 19, 2022
Of the total $3.5 billion, 3AC owes over $2.3 billion to their largest creditor, Genesis, a crypto brokerage. Similar to Voyager, the company issued an uncollateralized loan to 3AC. Blockchain.com’s CSO, Charles McGarraugh, stated that Kyle Davies, a 3AC co-founder, told him that he asked Genesis for an additional 5000 BTC, or $125 million at the time, to pay another lender. Such acts are often associated with Ponzi schemes considering that the company never had any capital. They were using borrowed money to pay off loans received from other creditors.
Though the company is already bankrupt, it will most likely be required to develop a plan to pay off part or all of its debts. We’ve seen many companies become insolvent and collapse due to over-leveraged bets and unsecured loans. Whether 3AC can pay off its debts is unknown, however, this makes investors more cautious about who they choose to invest with.
