Struggling crypto hedge fund Three Arrows Capital has filed for bankruptcy in the US, making it the latest crypto investment firm to crash in this year’s digital asset sale.
The liquidity crisis in the crypto ecosystem stems from the dismal performance of cryptocurrencies in 2022, which saw the leading token bitcoins fell more than 70% from its record high in November.
3AC lost at least $400 million in the crash, according to The block. Its inability to repay its debts has contributed to a wider liquidity crisis that is now spilling over to crypto.
“The collapse of Three Arrows Capital has caused the downfall of many other companies in the crypto space, especially the lenders from whom the hedge fund borrowed huge sums,” GlobalBlock analyst Marcus Sotiriou said Monday in a research note.
Here are the top crypto players that are suffering during the ongoing liquidity crisis:
digital travel suffered after 3AC failed to repay its debt. The exchange now holds $685 million in crypto assets, up from the $1.12 billion it loaned out, it said on Friday.
To cover its losses, the trading platform obtained a line of credit from FTX CEO Sam Bankman-Fried, Alamdeda Ventures, in the amount of $485 million in cash and bitcoins.
After initially reducing its withdrawal limits from $25,000 to $10,000, Voyager has now temporarily suspended transactions, deposits and withdrawals on its platform.
“This was an extremely difficult decision, but we believe it is the right one given current market conditions,” Voyager chief executive Stephen Ehrlich said in a statement. statement.
“Due to market developments, Deribit has a small number of accounts that are net indebted to us that we consider potentially distressed,” said one. Deribit tweeted in June.
Crypto exchanges Bancor and CoinFlex are also under pressure from the liquidity crisis.
Meanwhile, CoinFlex suspended all withdrawals on June 23. Roger Ver, the crypto evangelist known as ‘bitcoin jesus‘, owes the exchange $47 million, he said, although Ver denies it.
Prince noted that BlockFi is facing $80 million in losses from its loan to 3AC, but he does not expect further fallout, having fully accelerated the loan and fully liquidated or covered all associated collateral. .
Babel Finance and Vauld, based in Hong Kong, are two other crypto lenders forced to suspend withdrawals. Vaultwhich is backed by Coinbase Ventures, said monday it had frozen withdrawals, trades and deposits, and it is now explore restructuring.
Several of of babel top employees have left the lender since it said it was freezing accounts on June 17, according to The block.
Crypto lender and market maker Genesis faces potential losses of up to hundreds of millions of dollars, thanks to its exposure to 3AC and Babel, CoinDesk reported Thursday.