Per a report from The Wall Street Journal, proprietary crypto trading firm Three Arrows Capital (3AC) has confirmed the rumors about its insolvency. The firm has hired a legal and financial team of advisors to “work out a solution for its investors and lenders”, as stated by 3AC co-founder Kyle Davies.
Related Reading | Is Elon Musk Part Of A Dogecoin Pyramid Scheme? $258B Lawsuit Claims So
According to the report, the crypto firm suffered “heavy losses from a broad market selloff” in the digital space. Davies said:
We have always been believers in crypto and we still are. We are committed to working things out and finding an equitable solution for all our constituent.
The firm had billions in assets under management but was caught off guard by the collapse of the Terra ecosystem. On this network, massive selling pressure caused the price of LUNA and stablecoin UST to lose almost 99% of their values.
3AC was exposed to both of these assets, as The Wall Street Journal confirmed. The firm participated in a $1 billion token sale conducted by the Luna Foundation Guard (LFG), an entity created by Terra’s co-founder Do Kwon and entrusted with protecting UST and LUNA.
This sale seems key in 3AC’s downfall as it allowed LFG to raise billions of dollars. The funds were used to purchase Bitcoin. In case of a market crash, as it later happened, the entity was to sell these BTC and protect UST’s pegged to the U.S. dollar.
In addition to their exposure to LUNA, 3AC took a hit from LFC’s dumping their BTC into the market. This increased the selling pressure to levels last seen in March 2020. The crypto firm co-founder confirmed that they lost over $200 million in the LUNA-UST crash. He added:
The Terra-Luna situation caught us very much off guard.
The firm survived the Terra collapse, but it was unable to remain solvent as the crypto market continued its downside price action, greatly triggered by the LUNA-UST crash. As a consequence, the crypto market saw a decline in credit, fewer people are willing to lend under current market conditions.
Davies confirmed that 3AC is “exploring options” to offset its losses. The firm could sell a portion of its assets or accept a bailout from another firm, the report claims. In the meantime, the firm is working with its creditors “hoping to reach an agreement” and gained more time. Davies said:
We were not the first to get hit… This has been all part of the same contagion (the Terra crash) that has affected many other firms.
3AC is still trying to “quantify its losses”, the report said. This could impact other companies and projects within the industry. The firm had venture-capital investments in “dozens of private” crypto projects. Su Zhu, 3AC’s co-founder with Davies, added:
We are the biggest investors in the fund, and our intent was always for everyone to do well in it.
In the meantime, other ventures began liquidating 3AC’s positions. These include big names, such as crypto exchange BitMEX and FTX, and options platform Deribit.
Related Reading | Bear Market What? Bank of America Study Shows Interest In Crypto Remains Strong
At the time of writing, BTC’s price trades at $20,600 with a 32% loss in the last week.
This makes Commerzbank the first full-service German bank to receive such a license. With the license, it enables Commerzbank to provide custody services for crypto assets and expand its offerings to include "further digital asset services."
AaronCEO Sam Altman conveyed the decision due to an overwhelming surge in usage after OpenAI's DevDay, where new APIs were introduced. Altman mentioned that the platform's capacity has been exceeded, impacting user experience.
AaronPoloniex announces substantial progress in its restoration endeavours after falling victim to a significant security breach on 10 November.
CatherineShiba Inu faces a critical juncture as it tests key support levels, potentially paving the way for a 12% surge, while Ethereum experiences a momentary pause in its rally, with both cryptocurrencies navigating key technical indicators and market developments.
JasperCertiK raises inquiries regarding the security of Solana Saga, yet Solana defends its position with the resilience of enhanced Seed Vault technology and the demonstrated impact on the market.
KikyoThe operation relies on tricking users into clicking on these phishing links, then leading them to sign messages that unknowingly deplete their assets.
DavinDairy Queen and WGG join forces for a unique NFT pop-up in Chengdu, blending icy treats with digital art, showcasing NFT projects' adaptability beyond the virtual realm.
Hui XinMajor financial institutions, including JP Morgan's Onyx and Apollo Global, collaborate with the Monetary Authority of Singapore to explore blockchain integration for streamlined portfolio management.
JasperGoogle has filed a lawsuit against three individuals, accusing them of a sophisticated malware scheme. The defendants exploited Google's trademarks, using deceptive social media profiles to distribute malware disguised as upgrades to Google's AI chatbot, Bard. The legal action seeks damages and highlights the growing importance of digital security in the era of AI technology.
JixuThe SEC extends the deadline for Grayscale's Ethereum ETF decision until January 1, 2024, introducing uncertainty into Grayscale's strategic move, amidst a competitive landscape and evolving market dynamics.
Jasper