The Three Arrows Capital (3AC) shark has fallen into default and is starting to sell off assets, pushing Bitcoin and the crypto market deeper into bearish territory.
A source from CNBC said, Teneo Restructuring, a financial restructuring consulting company, has sent a representative to join 3AC’s board of directors to assist in handling asset liquidation processes. In the immediate future, the consulting firm conducts the evaluation of the company’s existing assets, then builds a website to guide “creditors” on how to contact and make claims.
3AC, founded by Zhu Su and Kyle Davies, is one of the prominent crypto hedge funds in the market (focused on investing in digital assets) and known for providing high leverage to client.
However, the recent freefall of the crypto market, blowing away billions of dollars from investors, has caused 3AC to fall into a liquidity crisis.
Earlier this week, the company failed to repay a $350 million USDC stablecoin loan and $15,250 Bitcoin equivalent to $304.5 million from Voyager Digital.
Before that, 3AC was also damaged by the collapse of the terraUSD coin and the LUNA . token
Also earlier this month, the Financial Times reported that US-based crypto lenders such as BlockFi and Genesis had liquidated some 3AC positions due to the company being called-margin and unable to deposit more funds to sign. fund.
The 3AC default raised concerns about a possible domino effect, as other crypto companies are also facing liquidity problems. Cryptocurrency lending network Celsius and exchange CoinFlex were forced to halt withdrawals citing “extreme market conditions.” In the case of CoinFlex, the situation is even more dangerous when a VIP customer has defaulted on a debt of 47 million USD.
New bearish spiral?
Meanwhile, the inflation rate shows no signs of slowing down, forcing central banks to maintain high interest rates, increasing the risk of economic recession in the US and other countries.
As of the morning of June 30, Bitcoin, the co-leader of the crypto market, is trading around $20,000, a relatively “dangerous” price area and can create a crash at any time. On June 29, there was a time when the coin fell to $ 19,800. Other cryptocurrencies, including Ether, also dropped in price.
Vijay Ayyar, Vice President of International and Corporate Development at Luno Exchange, said that Bitcoin is likely to trade in the range of $17,000 to $22,000, and another Fed rate hike is expected in July. continue to push the market to face new price drops.
“Most of the pullbacks have been sold down in the past weeks, which is common in a bear market to trap new buyers and let old investors out,” Ayyar said.
Sam Bankman-Fried, CEO of crypto exchange FTX, had to provide additional lines of credit to industry players such as BlockFi and Voyager Digital. However, the “systemic” problem of the market remains unresolved.
“The market is letting off steam after the recent sharp drop. But the systemic problems are still there and everyone is looking for ways to prevent the dominoes from falling,” said Charles Hayter, CEO of CryptoCompare.