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Court Orders Liquidation of 3 Arrows Capital - Sky

Investing.com
·2-min read

By Geoffrey Smith

Investing.com -- The collapsed crypto hedge fund 3 Arrows Capital is to be liquidated, according to a court ruling cited on Wednesday by Sky News.

A court in the British Virgin Islands, where 3AC has its domicile, handed down the ruling only a day after crypto investment platform Voyager Digital declared it in default on loans of $350 million and 15,250 Bitcoin ($307 million). Sky cited people familiar with the court's decision.

Voyager said it intends to recover its funds from 3AC but it is far from clear how much it can hope to recover, given the hedge fund's calculated bets on tokens issued by the Terra Luna network and on Ether derivatives that are now effectively worthless.

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The liquidation order may set an important precedent for the crypto space, as insolvency administrators sort out the rival claims of 3AC's creditors. That in turn could influence how much money - if any - investors in a number of platforms that have either stopped or limited withdrawals will ultimately recoup. Celsius Network, BlockFi, Hoo Exchange and AEX were among some of those who were forced to take such steps. Most have now at least begun to relax their restrictions. Voyager itself said on Tuesday that it was operating normally, having drawn down $75 million of a credit facility agreed last week with Alameda Research, the fund owned by FTX owner Sam Bankman-Fried.

Sky said that the court had appointed Teneo to act as insolvency administrators. A request for confirmation from Teneo wasn't immediately answered.

The news coincided with a fresh wave of selling of cryptocurrencies on Wednesday, as risk assets in general retreated again amid fears of higher interest rates and a U.S. recession. Bitcoin fell 4.5% to $20,101, while Ethereum fell 8.9% to $1,113.89 as of 9:15 AM ET (1315 GMT).

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