Crypto manager calls lawyers to try to avoid default; brokers run away from the company

Charlie Taylor

The situation of crypto investment firm Three Arrows Capital is worsening at high speed. Hit hard by the cryptocurrency crisis, the company hired a legal and financial advisory team to help with the task of dealing with investors and creditors in the face of a liquidity crisis and a default. The information comes from The Wall Street Journal. In addition, cryptocurrency exchanges FTX, Deribit and Bitmex liquidated positions they had in the manager, after the firm was unable to meet the margin call, which is an amount required as collateral for higher risk operations in the financial market. The information is from The Block portal. On Wednesday (15) investors began to fear about Three Arrows Capital’s ability to pay its creditors, due to the possibility of a liquidity crisis affecting the company. The Singapore firm, one of the leading investors in the crypto market, is experiencing a series of extreme liquidations, made by large clients who are in leveraged positions. The Block portal interviewed anonymous sources who have access to leadership levels and they said that liquidations have already reached US$ 400 million. In April of that year, Three Arrows Capital had $3 billion under management.

Selling assets and redeeming a third party are options

According to The Wall Street Journal, among the possibilities that the firm is studying are selling assets and a rescue made by another company. In addition, Three Arrows Capital is hopeful of reaching an agreement with creditors, which would give it more time to work on those plans. In the meantime, the firm continues to operate. “We have always believed in crypto and we continue to believe it. We are committed to working and finding solutions that are good for everyone involved,” said Kyle Davis, co-founder of the company. One of the law firms that is advising is Solitaire LLP, which told the paper that all of the firm’s clients are very wealthy companies or investors. Lawyers said they are keeping Singapore’s financial market regulator aware of any moves.

Brokerage settlements

Regarding the operations closed by the exchanges, the portal The Block states that Three Arrows Capital now owes $6 million to Bitmex; one of the sources in the report says that the impact on FTX was “minimal” and that Deribit suffered a “soft” blow. Bitmex sent an official position on the topic: “It was a collateralized debt and does not involve client funds. We will not be like other brands and speak poetically about our limited exposure and strong capital position. Instead, we will demonstrate this by providing our users with a reliable and liquid trading venue every day, no matter the situation.” Deribit confirmed that Three Arrows Capital is its shareholder and said that despite having some unbalanced accounts, but even if they all fail to pay their debts, this would not have the strength to seriously affect the company. FTX said it only comments on specific customers when there is a court order to do so.

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