By Geoffrey Smith
Investing.com — Collapsed crypto hedge fund 3 Arrows Capital is to be liquidated, according to a court ruling cited by Sky News on Wednesday.
A court in the British Virgin Islands, where 3AC is domiciled, issued the ruling just a day after crypto investment platform Voyager Digital declared it in default over loans of $350 million and 15,250 Bitcoin (307 millions of dollars). Sky cited people familiar with the court’s decision.
Voyager has said it intends to recover its funds from 3AC, but it is far from clear how much it can expect to recover, given the hedge fund’s calculated bets on tokens issued by the Terra Luna network and on Ether derivatives which are now effectively worthless.
The liquidation order could set an important precedent for the crypto space as insolvency administrators settle rival claims from 3AC creditors. This in turn could influence the amount of money – if any – that investors from a number of platforms that have stopped or limited withdrawals will ultimately get back. Celsius Network, BlockFi, Hoo Exchange and AEX were among those forced to take such action. Most have now at least begun to relax their restrictions. Voyager itself said Tuesday it was operating normally, after drawing $75 million from a credit facility agreed last week with Alameda Research, the fund owned by FTX owner Sam Bankman-Fried.
Sky said the court appointed Teneo to act as insolvency administrators. A request for confirmation from Teneo did not receive an immediate response.
The news coincided with a fresh wave of cryptocurrency selling on Wednesday, as risky assets in general retreated again amid fears of higher interest rates and a U.S. recession. Bitcoin fell 4.5% to $20,101, while Ethereum fell 8.9% to $1,113.89 as of 9:15 a.m. ET (1:15 p.m. GMT).