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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