Three Arrows Capital has been in default on a loan. The fund failed to repay a loan of $350 million, worth $323 million at today's prices.
Hundreds of billions of dollars in value have been wiped out in the last few weeks due to turmoil in the digital currency market. Though off their all-time highs, ether and bitcoin are both trading slightly lower. The total market cap of thecryptocurrencies is $950 billion, down from $3 trillion at its peak in November of 2011.
The company wants to recover from 3AC. The broker said that the platform continues to operate and fulfill orders. It's likely that that assurance is an attempt to contain fear in the broader community.
Stephen Ehrlich said that they were working diligently to strengthen their balance sheet and pursue options so they could continue to meet customer demands.
The company said it had $137 million in U.S. dollars. The company stated that it has access to a $200 million cash andUSDC revolver, as well as a 15,000bitcoin revolver from Alameda Venture.
FTX founder Sam Bankman-Fried's quantitative trading firm, Alameda, committed $500 million in financing to a virtual currency broker. The line of credit has been taken out by Voyager.
The statement said that the agreement with Alameda did not suffer from a default due to 3AC's default.
CNBC did not get a response from 3AC.
Three Arrows Capital was founded in 2012 by two people.
He has a very bullish view of the digital currency. He said last year that the world's largest coin could be worth millions of dollars. In May this year, he said that his "supercycle price thesis was sadly incorrect."
Digital currency projects and companies have been hurt by the newcrypto winter
The company is in the process of communicating with relevant parties and is fully committed to working this out, according to a message posted on the company's website.
There wasn't a follow-up about what the issues were.
People familiar with the matter told the Financial Times that U.S.-based BlockFi and Genesis had sold some of 3AC's holdings. 3AC couldn't meet the margin call after borrowing from BlockFi.
An investor has to commit more funds to avoid losses on a trade made with borrowed cash.
The stable coin terraUSD and its sister token luna collapsed.
3AC was exposed to Luna and lost money.
Davies told the Wall Street Journal in an interview that the Terra- Luna situation caught them by surprise.
The credit crunch is worsened by the continued pressure on the prices of cryptocurrencies.
The steam out of riskier assets has been taken away by the U.S. Federal Reserve's interest rate hikes.
3AC is one of the largest hedge funds that invests in different digital asset projects. There is fear of further spread across the industry.
The vice president of corporate development and international at Luno told CNBC that the value of 3AC's assets has declined greatly with the market.
If there are any large, remaining players that had exposure to them, then there could be a domino effect.
The market slump has caused a number of firms to face liquidity crises. Celsius, which promised users high yields for depositing their digital currency, paused withdrawals for customers due to extreme market conditions.
Babel Finance said this month that it is facing unusual pressures and stopped withdrawals.
Ryan Browne worked for CNBC.
All Rights Reserved © 2024
