Jakarta –
Three Arrows Capital or 3AC, a leading company managing crypto hedge funds, has defaulted on debt of more than US$ 670 million or Rp 9.91 trillion (exchange rate of Rp 14,800). The information was announced by a digital asset broker or broker, Voyager Digital on Monday morning local time.
Quoted from CNBCTuesday (28/6/2022), Voyager Digital stated that 3AC could not repay its loan of US$ 350 million or Rp. 5.19 trillion in the stablecoin USD Coin (USDC) and there were 15,250 Bitcoins pegged at a value of US$ around US$ 323 million or Rp. 4.7 trillion.
This solvency crisis (how much the company can afford to pay its debts) 3AC, comes after weeks of turmoil in the crypto market, which have wiped out hundreds of billions of dollars in value. In fact, Bitcoin and Ethereum have traded slightly lower in the last 24 hours. Meanwhile, the overall crypto market cap stands at around $950 billion, down from around $3 trillion at its peak in November 2021.
Voyager also said it would pursue recovery from 3AC. In the interim, the broker stressed that its platform will continue to operate and fulfill customer orders and withdrawals. That assurance, is likely an attempt to contain fear through the wider crypto ecosystem.
“We are working diligently and rapidly to strengthen our balance sheet, and are pursuing options so we can continue to meet customer liquidity demands,” said Voyager CEO Stephen Ehrlich.
On Friday, Voyager said it owns about $137 million and owns crypto assets. The company also noted that it had access to $200 million in cash and USDC revolvers, as well as a $15,000 bitcoin revolver from Alameda Ventures.
Three Arrow Capital’s troubles appear to have started earlier this month, after founder Zhu Su tweeted a somewhat cryptic message that the company was “in the process of communicating with relevant parties” and “fully committed to resolving this.”
The Financial Times reported that following Zhu’s tweet, crypto lending firms BlockFi and Genesis have also liquidated some of their positions at 3AC. 3AC had borrowed from BlockFi but was unable to meet the margin call. Margin call itself is a term that occurs when a broker, will notify the position holder to make additional capital on the basis of margin transactions.
A terrible thing will happen if the position holder is unable to pay the margin call. If unable to pay the funds within a certain period of time, the broker will close all positions held by the company, either selling in a long position (forced sell) or buying in a short position.
3AC also had exposure to Terra LUNA. After the price of LUNA dropped some time ago, 3AC began to have problems in fulfilling its obligations to brokers who were also its creditors.
“The Terra LUNA situation caught us completely off guard,” said 3AC co-founder Davies.
(fdl / fdl)
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