It all started with the collapse of Terra Luna and as more than $50 billion vanished, several big crypto projects or funds admitted significant exposure to Terra Luna. Three Arrows Capital was one of them and as it is going through bankruptcy, liquidators of the prominent hedge fund are going to look at it more closely.
Three Arrows Capital update
Three Arrows Capital or 3AC was a huge crypto hedge fund with around $10 billion in managed assets right before its collapse in July. Three Arrows Capital Ltd.’s liquidators were reportedly successfully obtaining a significant court ruling in Singapore that could help them better understand the surviving assets of the bankrupt crypto hedge fund in a major jurisdiction.
According to people who chose to remain anonymous, the Singapore High Court on Monday approved a petition by advisory firm Teneo to recognize the liquidation order in the nation after it was appointed by a British Virgin Islands court to liquidate Three Arrows in June.
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The assets of the hedge fund are being gathered and protected by Teneo. Reportedly, the fund’s recognition in Singapore gives the liquidators the right to ask for access to any local financial records the fund kept. However, before being formally recognized by a local court, the people claimed that they lacked the legal justification to do so.
The goal of the liquidators is to determine which Singapore-based assets, such as bank accounts, real estate, cryptocurrencies, non-fungible tokens (NFTs), and stock investments, can be linked back to 3AC specifically. According to July’s filings, the assets of Three Arrows Capital have been taken over by the liquidators to the tune of at least $40 million.
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According to documents submitted to the court, creditors have unsecured claims totalling more than $2.8 billion, with the amount further projected to increase. The domino effect was started by Terra Luna and has not stopped yet as many other crypto companies such as Hodlnaut or Genesis feel the negative sentiment, liquidity problems, etc. As a result, they are forced to shut down or halt withdrawals.
Dear users, we regret to inform you that we will be halting withdrawals, token swaps and deposits immediately due to recent market conditions. We have also withdrawn our MAS licence application. Here is our full statement https://t.co/5KfHUBzWsn Our next update will be on 19 Aug.
— Hodlnaut (@hodlnautdotcom) August 8, 2022
The bottom line
Overleveraged funds like 3AC and crypto Ponzi schemes like Terra Luna brought the whole crypto market down hard, and many question the future of cryptocurrencies once again. However, most of these overly risky companies will disappear and a new trend should emerge when the dust settles.