The defunct hedge fund Three Arrows Capital (3AC) received $2.36 billion in loans from Genesis Asia Pacific Pte Ltd, a cryptocurrency lender operated by Digital Currency Group.
While earlier reports claimed Genesis faced a potential nine-figure loss due to its exposure to 3AC, the exact amount has not been disclosed.
What is the company’s debt?
There is a $2.36 billion debt owed by 3AC to Genesis, according to documents found by the Block. In addition, they demonstrate that the debt is inadequately collateralized and that Genesis, through the American Arbitration Association (AAA) in New York, initiated arbitration proceedings against 3AC last month.
After Teneo was selected to supervise 3AC’s liquidation in late June, Genesis appears to have halted the arbitration procedure. Earlier this month, 3AC filed for Chapter 15 bankruptcy protection in New York.
Impact of this case on DCG
According to a DCG representative, both DCG and Genesis maintain solid balance sheets. As a result, Genesis is well-capitalized and can run its business generally without further exposure to Three Arrows Capital.
According to records collected by The Block, 3AC was $462 million short of its collateral obligations as of June 15.
Additionally, the records contain information about the collateral posted by 3AC. AVAX, the native token of the Avalanche blockchain, is backed by 17,443,644 Grayscale Bitcoin Trust (GBTC) shares, 446,928 Grayscale Ethereum Trust shares, and 13,583,265 NEAR Protocol shares.
Final Words
The 3AC Group was considered one of the industry’s most respected investment firms until relatively recently, supporting many blockchain startups, DeFi businesses, and crypto infrastructure providers.
The 3AC group’s fortunes changed drastically in the last few months after cryptocurrency lenders liquidated hundreds of millions of dollars in loans to the hedge fund with collateral.
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