Recent events in the crypto ecosystem suggest that Three Arrows Capital, once the largest hedge fund in Singapore is on the brink of filing for insolvency. The company is weighed down with crypto depth, and no lifeline seems to be pulling through at the moment.
Just yesterday, Voyager Digital announced its plans to issue a notice of default to Three Arrows Capital. Voyager Digital exposed a significant portion of its portfolio to 3AC’s investment schemes.
The stock price of the crypto firm plunged by 60% following the news of its links with 3AC. At the moment, the company’s exposure to 3AC is worth $660 million. Three Arrows Capital holds 15,250 BTC and 350 million USDC for the New York-based company.
On the 24th of this month, Voyager Digital requested repayment of $25 million. Three days later, Voyager Digital requested repayment for its BTC holdings and $325 million of its USDC holdings from Three Arrows Capital. None of these requests were fulfilled as 3AC is currently battling with the crypto market crash.
Three Arrows Capital on the Verge of Liquidation
As it stands, it seems liquidation is inevitable for 3AC’s investments. The company has borrowed funds in BTC, ETH, and USDC from multiple sources and the heat from the bearish market is now unbearable.
Some of the company’s notable investments include $40M worth of stETH on Lido protocol and $245M worth of ETH on Aave and Compound. Three Arrows Capital also invested heavily in LUNA and UST before the Terra protocol crashed.
At the moment, there seems to be no further source of funds for the hedge fund. Billions of dollars are on the verge of disappearing into thin air and 3AC is yet to give a clear report on its current woes.
The compounding issues have left the company with almost no choice but to file for insolvency.