Cryptocurrency-focused hedge fund Three Arrows Capital has been hit by margin calls, according to a «Financial Times» report.
Singapore-based Three Arrows Capital failed to meet margin calls over the past weekend amid a sector-wide plunge in the value of cryptocurrency-related assets, the «Financial Times» reported Thursday.
BlockFi can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations on an overcollateralized margin loan. We fully accelerated the loan and fully liquidated or hedged all the associated collateral.
— Zac Prince (@BlockFiZac) June 16, 2022
Among those taking hold of some of the fund’s assets, crypto lender BlockFi liquidated at least some of Three Arrows’ holdings, which had been used as collateral, the report said, citing people familiar with the matter.
Roiling Cryptocurrency Players
Zac Prince, CEO of BlockFi, said on his verified Twitter account that it liquidated the collateral of a margin loan to a large client which he did not name.
«We believe we were one of the first to take action with this counterparty,» he said in a tweet.
One of Three Arrows’ portfolio companies, Finblox, a crypto-based lending platform, released a statement on Twitter saying it was imposing withdrawal limits so it could evaluate how the Three Arrows news would impact its portfolio.
IMPORTANT UPDATE FROM FINBLOX! pic.twitter.com/VjclRMMiSe
— Finblox (@finblox) June 16, 2022
Cryptic Message
On Wednesday, Zhu Su, a co-founder of Three Arrows, sent out a cryptic tweet believed to be related to potential losses at the fund.
«We are in the process of communicating with relevant parties and fully committed to working this out,» Zhu Su said in the tweet, published from his verified account, on Wednesday.
Three Arrows did not respond to finews.asia’s emailed request for comment sent Thursday.
A previous «Bloomberg» report noted that information on the size of the Three Arrows Capital fund is «sparse,» and cited data from blockchain analytics firm Nansen estimating the assets under management at US$10 billion in early March – before the selloff in crypto assets began to snowball. The «Financial Times» cited one source who said they were told the fund’s total value was US$4 billion in recent months.
Market Selloff
The broader crypto industry has been hard-hit by the selloff in digital assets, with layoffs widespread. Crypto.com and BlockFi have all cut hundreds of jobs while rival exchange Coinbase Global announced it would slash 1,100 jobs – or 18 percent of its workforce.
Since peaking in November 2021 at around US$2.9 trillion, the crypto market fallen nearly two-thirds to around US$969 billion, according to data from CoinMarketCap. In addition to a challenging macro environment, digital currencies have been hit by various market troubles including the collapse of stablecoin TerraUSD and the recent halt of withdrawals at crypto lender Celsius Network.
