Crypto Hedge Fund Three Arrows Capital Defaults, Who’s Next?
As we pointed out in our June 2022 overview of the historic week for crypto and Bitcoin a cryptocurrency focused hedge fund known as Three Arrows Capital (3AC to the cryptoshpere) was probably the next on the chopping block. After Terraform Labs (Terra and Luna) and crypto lender Celsius, it is already the third major player in cryptoland to go bust. The question now rises who could be next?
The Singapore-based hedge fund 3AC, set up in 2012 by Su Zhu and Kyle Davies, had specialized in crypto in the past few years.
BREAKING: 3AC liquidated pic.twitter.com/JnJvldD180— ozel.py (@Ahmet0zel) June 29, 2022
Already in the past few weeks rumors of problems for the fund had been swirling, but its owners were confident that a solution could be found. However, this Monday 3AC failed to make the required payments on a loan worth more than $665 million.
Mr Davies told the Wall Street Journal that it was:
Committed to working things out and finding an equitable solution for all our constituents.
Coinbase lining up for default as well?
With now three firms (Terraform Labs, Celsius and 3AC) having brought problems for the cryptosphere, Wall Street is eager to find out who is next. As Goldman Sachs analysts downgraded Coinbase earlier this week, some fear that Peter Brandt’s prediction might come true.
Goldman analyst William Nance said:
We believe Coinbase will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up.
Coinbase stock closed near it’s lowest ever yesterday evening on Wall Street, a mere $49.