The cryptocurrency hedge fund Three Arrows Capital (3AC) has reached a point of no return. A court in the British Virgin Islands has ordered the struggling Singapore firm to liquidate amid its inability to pay back its creditors. The process will reportedly be led by global advisory firm Teneo.
The liquidation of 3AC is expected to have big consequences on the cryptocurrency world while deepening the crypto market crisis. Bitcoin has already lost around 5 percent of its value and is now trading below $20K for the first time since min-June.
It is less clear how the liquidation will affect Three Arrows Capital’s creditors. Crypto broker Voyager Digital issued a default notice to 3AC earlier this month in regards to a loan worth more than $670 million.
The 3AC co-founder Kyle Davies previously told the media that the management is looking into ways to salvage the hedge fund. Some of the mentioned options included selling assets or being bailed out by another company. It seems unlikely that any of these options are now on the table after the liquidation order.
Davies set up Three Arrows Capital in 2012 with his partner Su Zhu. The fund saw a rapid rise since the pandemic and reportedly managed close to $10 billion in cryptocurrency assets in early March. However, the crypto market meltdown and mounting losses caused the company to fall behind on margin calls and eventually led to its demise.