Major Crypto Hedge Fund Three Arrows Capital Faces Insolvency Amid Market Crash
Singapore-based crypto hedge fund Three Arrows Capital faces insolvency after suffering massive liquidations, putting further downward pressure on the struggling digital asset market. Multiple lenders and associated platforms are rapidly cutting ties to limit their exposure.
The deepening crypto crash claims a major casualty as Singapore-based hedge fund Three Arrows Capital reportedly faces insolvency following $400 million in liquidations. The fund, which manages around $10 billion in assets according to blockchain analytics firm Nansen, fails to meet margin calls and sells off massive portions of its cryptocurrency holdings. This massive sell-off adds heavy downward pressure on an already beleaguered digital asset market.
Lenders move quickly to protect themselves as the hedge fund's financial health deteriorates. Cryptocurrency lender BlockFi accelerates a large overcollateralized margin loan and fully liquidates the associated collateral after Three Arrows fails to meet its obligations. Other entities with ties to the fund, including high-yield platform Finblox and derivatives exchange Deribit, publicly disclose their exposure and take steps to secure their operations.
Three Arrows Capital co-founder Su Zhu acknowledges the turbulence on social media, stating that the fund is communicating with relevant parties and working to resolve the crisis. However, the fallout from the fund's potential collapse aligns closely with a recent prediction from Galaxy Digital CEO Mike Novogratz, who warns that two-thirds of crypto hedge funds will go out of business during this intense market downturn.