A person with knowledge of the matter told CNBC that Three Arrows Capital had fallen into insolvency.
The person who requested anonymity because they were not authorized to discuss the matter publicly said that Teneo was brought on board in the last few days.
Sky reported on the story.
When contacted by CNBC, Three Arrows Capital, also known as 3AC, did not reply.
The person said that Teneo is in the beginning stages of the process. The restructuring firm is taking steps to realize the assets 3AC has, then it will set up a website with instructions for how to make claims, the source said.
3AC is one of the most prominent hedge funds that focuses on investments in digital assets and is known for its high leverage bets. He has a very bullish view on the digital currency.
A slump in digital currency prices, which has seen billions of dollars wiped off the market in recent weeks, has hurt 3AC.
$350 million in the U.S. dollar-pegged stable coin,USDC, and 15,250 bitcoins, worth about $300 million at today's prices, were made up of 3AC's default on a loan.
3 AC had exposure to the collapsed stable coin terraUSD.
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.
Part of the market that could potentially be exposed to the company have been spooked by the unwind of 3AC.
Liquidity issues have been faced by other cryptocurrencies. Due to extreme market conditions, Celsius and CoinFlex had to stop withdrawals.
A customer that failed to repay a $47 million debt created a problem for the company.
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