Court orders liquidation of Three Arrow Capital

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A British Vir­gin Islands Court has ordered the liq­ui­da­tion of Three Arrows Cap­i­tal (3AC), plung­ing the cryp­to hedge fund into a deep­er cri­sis, Sky News report­ed.

Accord­ing to the report, Teneo Restruc­tur­ing has been man­dat­ed to han­dle 3AC’s restructuring.

Ear­li­er in the week Voy­ager Dig­i­tal issued 3AC with a notice of default after fail­ing to repay a loan worth around $660 mil­lion, 15,250 Bit­coin, and $350 mil­lion in USDC.

Although 3AC has yet to com­ment on the deci­sion, many believe the rul­ing is a piv­otal moment for the strug­gling cryp­tocur­ren­cy indus­try. The finan­cial impli­ca­tions of the liq­ui­da­tion for 3AC cred­i­tors are unclear.

The rul­ing comes almost two months after 3AC got its first whiff of trou­ble with the crash of LUNA and UST tokens.

Accord­ing to reports, the firm alleged­ly acquired a sig­nif­i­cant UST posi­tion in Anchor using coun­ter­par­ty funds with­out inform­ing investors.

3AC co-founder and Chair­man Kyle Davies said the firm is com­mit­ted to work­ing things out. He added that the firm would con­sid­er options like a res­cue by anoth­er firm or sell­ing some of its assets.

How­ev­er, with a manda­to­ry liq­ui­da­tion now immi­nent, it is unclear how 3AC will proceed.

3AC liquidation could have a ripple effect on crypto industry

The liq­ui­da­tion of 3AC is sure to have a rip­ple effect on the cryp­to space because of its pletho­ra of cred­i­tors in the indus­try, includ­ing Cel­sius, Nexo, Bit­Mex, Block­Fi, and FTX.

Beyond that, its liq­ui­da­tion could also influ­ence future reg­u­la­tions on the cryp­tocur­ren­cy industry.

A new­ly pro­posed cryp­to bill by sen­a­tors Cyn­thia Lum­mis and Kirsten Gilli­brand is cur­rent­ly receiv­ing rec­om­men­da­tions from stake­hold­ers in the cryp­to space.

Apart from that, the pres­i­dent of the Euro­pean Cen­tral Bank (ECB), Chris­tine Lagarde, has urged reg­u­la­tors to intro­duce new laws that guide cryp­to activ­i­ties like stak­ing and lending.

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