[UPDATED] 3AC Enters Liquidation – What Happens Next?
Updated 02/06/22
3AC has filed for Chapter 15 bankruptcy, a move that protects its US assets while a liquidation is carried out in the British Virgin Islands, where the company is incorporated, Bloomberg reported.
The law firm Latham & Watkins is representing Three Arrows in the US bankruptcy.
It’s actually happened – crypto hedge fund Three Arrows Capital (3AC) is plunging into liquidation.
On Wednesday, a British Virgin Island court ordered the firm into liquidation amid the ongoing crypto winter. Whilst 3AC recently moved its headquarters from Singapore to Dubai, the firm was incorporated in the British Virgin Islands.
3AC has been in a distressed state since last month’s LUNA fallout.
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Contagion from 3AC’s demise has spread across the crypto space. On Monday, crypto platform Voyager Digital issued a notice of default to 3AC for failing to make payments on a loan worth over US$665 million.
“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” said Voyager chief executive Stephen Ehrlich in an announcement.
Read more: Crypto Contagion Spreads as Voyager Digital Reveals US$665M 3AC Exposure
Celsius Network, Kyber Network, BlockFi and 8 Blocks Capital are amongst the others with significant exposure to 3AC.
Last week, FTX providing BlockFi with a US$250 million revolving credit facility. The move gave FTX an option on 50% of BlockFi equity with the remainder made available for US$25 million. However, Morgan Creek Digital is reportedly set to offer US$250 million to purchase a majority stake in BlockFi, which would counter FTX’s deal.
What Now?
Global consulting firm Teneo Restructuring has reportedly been brought on board to manage 3AC’s insolvency. Teneo will focus on protecting 3AC’s assets.
Investors and creditors are now waiting for Teneo to determine how the firm’s assets will be divided. The crypto world is watching closely as to how 3AC will proceed.