Major cryptocurrency hedge fund Three Arrows Capital has gone into liquidation, a person with knowledge of the matter told CNBC, one of the biggest casualties of the latest so-called “crypto winter.”
In the past few days, Teneo has been involved in the liquidation process, said the person, who asked not to be named because he is not authorized to publicly discuss the matter.
Sky News first reported liquidation history.
Three Arrows Capital, or 3AC as it is also known, did not respond to a request for comment when contacted by CNBC.
Teneo is in the very early stages of the liquidation process, the source said. The restructuring firm is taking steps to dispose of assets held by 3AC, the source said, and will then set up a website in the next day or two with instructions on how creditors can contact them to make any claims.
3AC, co-founded by Zhu Su and Kyle Davis. one of the most famous crypto hedge funds (which the focus on investing in digital assets such as cryptocurrencies) and is known for its high leverage rates. Zhu has extremely optimistic views on bitcoin.
But the digital currency’s price slump, which has seen billions of dollars disappear from the market in recent weeks, has hurt 3AC and exposed the company’s liquidity crunch.
3AC is facing the collapse of its algorithmic stablecoin terraUSD and sister token luna.
Financial Times Earlier this month, it was reported that U.S. crypto lenders BlockFi and Genesis liquidated some 3AC positions, citing people familiar with the matter. 3AC took out a loan from BlockFi but failed to meet a margin call.
A margin call is a situation in which an investor must allocate more funds to avoid losses on a leveraged trade.
The cessation of 3AC’s activities has raised concerns that parts of the market that could potentially be affected by the company will be contaminated.
Other crypto companies have also faced liquidity issues. Lending firm Celsius and cryptocurrency exchange CoinFlex were forced to suspend withdrawals for customers both cite “extreme market conditions”.
However, CoinFlex had a different issue with the client, which failed to repay a $47 million debtcreating a liquidity problem for the company.