Cryptocurrency sector ‘bloodbath’ could claim another casualty, with co-founder of multibillion-dollar hedge fund Three Arrows Capital taking to Twitter to try to tackle rumors the company is insolvent following the market crash.
With a net asset value of $18bn (£14.9bn) in its last public statement, the Singapore-based hedge fund was known to take large, highly leveraged stakes directly in crypto businesses and cryptocurrencies. He holds positions in cryptocurrencies including Bitcoin, Ethereum and Solana, as well as stakes in companies such as the BlockFi exchange and options trading platform Deribit.
The turmoil in the crypto markets has significantly reduced the value of these holdings and wiped out some other stakes the fund, known as 3AC, has taken, including in the doomed “algorithmic stablecoin” project Terra and the game “play. -to-earn” Axie Infinity, which suffered a $700 million hack late last year attributed to North Korean state-sponsored hackers.
Zhu Su, the Dubai-based investor behind the crypto-focused trading house, tweeted Wednesday morning that “We are in the process of communicating with the affected parties and we are fully committed to resolving this issue.”
With traders already nursing their wounds after bitcoin’s price fell 25% in a single day, sparked by ersatz crypto bank Celsius’ announcement that it would suspend withdrawals, Zhu’s statement kicked off another day of turmoil in the crypto sector. Chief executive of crypto exchange Binance, Changpeng Zhao, described the situation as a “bloodbath.”
Bitcoin’s value continued to fall on Wednesday, to just over $20,000, 70% below its November high of $69,000.
Tether, the centralized stablecoin that is systemically important to the broader cryptocurrency industry, issued a statement denying any loss of 3AC or Celsius.
“Celsius’ position was liquidated without any loss to Tether,” the company said. “Tether’s lending business with Celsius (as with any other borrower) has always been over-collateralized. Tether currently has no exposure to Celsius except for a small investment made from Tether’s shares in the company.
The company previously told the Financial Times that its loans to Celsius were 30% over-collateralized, meaning it took out $1.30 in bitcoins for every dollar lent.
Celsius added: “Tether is aware of other rumors spreading, suggesting it lent exposure to Three Arrows Capital – again, this is categorically false.
The company also dismissed allegations that its large commercial paper holdings – short-term business loans – were held in disproportionately risky investments. He also said he intended to replace those holdings with US Treasuries, although he offered no date when that change was to take place.
On Wednesday, the Tron reserve project DAO, which backs the USDD algorithmic stablecoin, announced that it was withdrawing more than $100 million worth of cryptocurrency from Binance to support the dollar peg of its stablecoin, which had slipped to $0.97 on crypto exchanges. This raised fears that the stablecoin could follow in the footsteps of its similarly structured counterpart UST, whose collapse precipitated the latest crisis.
Teunis Brosens, chief economist for digital finance at Dutch bank ING, said that while the cryptocurrency rush could partly be explained by broader market conditions, the recent collapse of the Terra stablecoin project had sparked deeper concern about the overall viability of some of the lesser-known digital assets. “Crypto investors have become very critical, especially of the more complex products, and want to get out. There may still be confidence in bitcoin and ethereum, which are the simplest currencies, but as people scramble to release complex products, entities like Celsius must liquidate their conventional coins like bitcoin and Ethereum, which only lowers their price further. ”
On Tuesday night, Bill Gates warned that the crypto industry was a bubble economy, “100% based on a dumber theory,” the idea that profit comes from finding someone dumber than you to sell to. your asset. “I’m used to asset classes…like a farm where they have production, or like a company where they make products,” Gates said.
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Cryptocurrency ‘Bloodbath’ Threatens Multi-Trillion Dollar Hedge Fund | Cryptocurrencies – Tech Tribune France
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