Crypto Hedge Fund Three Arrows Capital Already Struggling several weeks with financial problems. It invested in Terra (LUNA), and when this token collapsed it ran out of money. But it hadn’t sold all of its holdings yet. The judge has now ruled that this must be done.
3AC must sell bitcoin
That writes Sky News, who has heard that consultancy firm Teneo wants to help with the sales. Three Arrows Capital, or ‘3AC’ for short, turned out to have a lot of debt, and has therefore been forced to sell. It is not clear which investors see their money back and how much money it is exactly. Previously, the fund would have had about 18 billion dollars under management. Apart from Terra, the market as a whole has already fallen hard, so the amount it has available now will be a lot less.
The company also offers ‘treasury management‘ to companies, which in this case means that it receives ‘standing’ money from companies that want a return on their money. 3AC invested that money in cryptocurrencies. The companies that have given their money to this fund are therefore vulnerable.
3AC will have the necessary lawsuits pending. In addition to the case against Terraform Labs (of the LUNA token), most investors in the fund will also have filed a case. This way they can claim their money back, but if they get their money back at all, it will at most be part of their investment. The money simply isn’t there. Yesterday it was announced that the fund could no longer repay two loans totaling $625 million to Voyager Digital.
Consequences for cryptocurrencies
Maybe you thought 3AC was already selling, and bankruptcy was already factored into the price. But apparently that is not the case, and the effects can already be seen in the price at the time of writing. If this fund has to sell, that’s reason enough for other companies to do the same.
The liquidation therefore ensures that other companies have to do the same. Not only are funds vulnerable, but all cryptocurrencies. Then the riskiest, most volatile assets are sold the most. So sell out in crypto.
