Three Arrows Capital, commonly referred to as “3AC”, was a Singaporean-based cryptocurrency hedge fund. As early as March, it was reported that they managed somewhere between $10B and $18B, making it one of the largest crypto hedge funds in the world. However, 3AC is now headed to bankruptcy court after price declines in the digital asset ecosystem, combined with extremely high leverage, wiped out all the company’s assets and have now left it unable to repay its lenders.
Three Arrows’ strategy involved borrowing money from across the industry and then turning around and investing that capital in other, often nascent, crypto projects. The firm had been around for a decade, which helped give founders Zhu Su and Kyle Davies a measure of credibility in an industry populated by newbies. However, because of their actions, some of those allegedly fraudulent, the contagion spread throughout the cryptocurrency ecosystem. Companies who had thought 3AC was a credible borrower are now left hat in hand. For example, Voyager Digital, a digital asset brokerage firm in Canada recently filed for Chapter 11 bankruptcy protection after 3AC couldn’t pay back the $670 million it had borrowed. Voyager is just one of many lenders who are now left with little recourse or hopes of getting their money back. Other firms impacted include Blockchain.com, Genesis Trading, BlockFi, Bitmex, and even FTX.