According to court records, Three Arrows Capital (3AC) owes a staggering $3.5 billion to 27 different businesses, including Blockchain.com, Voyager Digital, and lender Genesis Global Trading.
The information is derived from affidavits that describe the insolvency and liquidation of the cryptocurrency hedge fund in detail. The company appointed to supervise 3AC’s liquidation, Teneo, made them public on Monday after filing them on July 7.
According to the documents, 3AC did not repay loans and repeatedly missed margin calls with lenders, which caused its investment accounts to drop below necessary levels and not be topped up.
3AC owes Genesis over $2.36 billion
Genesis, a business under the wings of the Digital Currency Group, loaned 3AC most of the $3.5 billion total. According to the court records, it passed the now-bankrupt company $2.36 billion in a loan that was under-collateralized and had an 80 percent margin requirement.
The documents, which total more than a thousand pages, make several claims that “3AC is bankrupt and should be wound up.”
Chief Strategy Officer of Blockchain.com Charles McGarraugh also stated in an affidavit filed on June 26 that Three Arrows Capital co-founder Kyle Davies informed him on June 13 that Davies attempted to borrow an additional 5,000 Bitcoin from Genesis, which at the time had a value of about $125 million, “to pay a margin call to another lender.”
Do Kwon’s iconic Terra blockchain failed, which set off a cascade of liquidations, bankruptcies, and financial difficulties that affected the whole crypto business, including Three Arrows Capital.
According to its insolvency paperwork, Three Arrows Capital suffered a loss of almost $200 million when, in May, UST destabilized from its $1 peg and caused the value of LUNA to plummet.