Key Takeaways
- 3AC has filed for Chapter 15 bankruptcy in New York. Chapter 15 Bankruptcy is usually filed to protect the debtor’s assets.
- Voyager Digital recently suspended trading and withdrawals, citing unpaid loans to Three Arrows totaling $646 million.
- On Wednesday, a court in the British Virgin Islands ordered the liquidation of 3AC after the company suffered huge losses in the recent market turmoil.
Renowned crypto hedge fund Three Arrows Capital (3AC) has filed for Chapter 15 bankruptcy in New York. Chapter 15 bankruptcy is usually filed to protect the debtor’s assets. The Latham & Watkins law firm will be representing Three Arrows Capital. The filing for bankruptcy marks the end for one of crypto’s biggest players in the market, which managed as much as $10 billion in assets as recently as March.
The latest development comes in the wake of Voyager Digital suspending trading and withdrawals, citing unpaid loans to Three Arrows totalling $646 million. Earlier this month, Voyager Digital issued a statement revealing that it had around $500 million in exposure with Three Arrows. It issued a notice of default for failure to make the required payments on its previously disclosed loan of 15,250 BTC and $350 million USDC.
The descent into bankruptcy for 3AC was slow but expected. Speculations regarding 3ac’s rumored insolvency began spreading when the firm transferred assets to deposit funds on DeFi platforms in order to reduce liquidity risk. The algorithmic stablecoin LUNA’s crash further exacerbated 3AC’s already weakening financial stability. According to reports, 3AC had previously invested over $200 million in LUNA tokens in February. The latter loss of the stETH peg brought 3AC closer to bankruptcy.
To top it all off, crypto trading platform 8BlocksCapital accused 3AC of skimming $1 million to liquidate margin trading. 3AC also owes the BitMEX exchange around $6 million. Filing for bankruptcy became necessary for 3AC when on Wednesday, a court in the British Virgin Islands ordering the liquidation of 3AC, after the company suffered major losses in the recent market turmoil.
The 3AC’s bankruptcy filing puts the spotlight on Celsius Network, which is rumored to be on the brink of insolvency after suspending withdrawals. Celsius Network has onboarded advisors to help with the bankruptcy crisis and is expected to file for insolvency soon.
