Three Arrows and Block Fi’s relationship.
Three Arrows Capital LTD. is a Singapore based hedge fund company which was established in 2012, and envisioned in providing superior risk adjusted returns. The company was founded by Su Zhu and Kyle.
In 2020, Three Arrows went on to buy bitcoins on credit from the US crypto lending platform BlockFi. Until 2021, the situation for Three Arrows was quite stable as the market was functioning as the expectations of the company. The start of 2022, saw the down fall of the company and when the market implosion occurred in May, the hedge fund company was shattered to say the least.
The hedge fund company took credit for bitcoins from the crypto lending platform and the plummeting prices of bitcoin and Ethereum have made the situation worse for Three Arrows. According to a report, the crypto lending company has gone ahead and liquidated the hedge fund company’s positions to some extent.
Failure in meeting the marginal call on the loan.
If the reports were to be believed, then Three Arrows Capital actually failed in meeting the marginal call on the loans it had taken by BlockFi, which directed the later to liquidate the positions of the hedge fund company.
It is also believed that, the liquidation process has happened in both the party’s consent and mutually. The CEO and the Co-founder, of the hedge fund company Kyle Davies, chose to remain silent and not comment about the liquidation done by BlockFi.
BlockFi CEO’s comments.
In a tweet, BlockFi CEO, Zac Prince, claimed that his company had gone ahead and liquidated collateral of a big company’s position against a loan offered. In addition, he quoted that,” We fully accelerated the loan and fully liquidated or hedged all the associated collateral.”
Hedge Fund’s attempts gone in vain.
Three Arrows Capital had actually tweeted on Wednesday about the situation it was in and also claimed that, it was committed to working things out. The talks about Three Arrows liquidation issues were doing the rounds in the market and social media already. The CO-Founder also tweeted that, “We’re in the process of talking with the appropriate parties and are totally dedicated to resolving this.”
In the situation that the hedge fund company is in, there’s no more options left for the company to save the collateral considering the current situation of the market and the direction the market is heading into. Some crypto experts also believe that the market is entering the most feared phase called “Crypto Winter” and can cause shattering investment loses in the near future.