July started off with a lot of negative news, causing the price of the top cryptocurrencies to drop at times. The price of bitcoin has fallen below the all-time highs of the 2017 bull cycle for the first time. Unforeseen events in June and early July have been at the forefront of major hedge funds.
3AC Looks Like a Ganer
On July 2, Three Arrows Capital (3AC), one of the most popular hedge funds in the cryptocurrency industry, reported filing for Chapter XV bankruptcy with the Southern District of New York Bankruptcy Court.
The bankruptcy approval is potentially the only alternative to 3AC at this time after Voyager announced the company’s default. 3AC is seeking bankruptcy protection under US regulation.
Without bankruptcy protection, 3AC’s creditors would take them to court for the property.
If this happens, systematic liquidation of assets and maintaining creditor fairness will be impossible. The fund also said that one of its creditors has initiated legal action against 3AC in a New York court.
no big surprise
Investors are not surprised by 3AC’s bankruptcy as the fund has heavily invested in LUNA and UST, and when these two tokens failed, it set up a domino effect that resulted in investments from many high-profile individuals and large companies. Damage done.
Earlier in June, digital asset broker Voyager Digital announced that 3AC USD-pegged stablecoins failed to repay a loan of $350 million in USDC and 15,250 bitcoins. The above loans were earlier given by Voyager Digital to 3AC but the lender did not disclose the specific timing.
Apart from the 3AC default, the ongoing market crash ignited by the collapse of Terra (LUNA) pulled down many crypto VC funds as they currently have no financial ability to survive. 3AC bankruptcy has had many consequences for financial corporations, including Voyager.
Recently, Voyager Digital suspended all customer deposits and withdrawals. The company’s CEO said the decision gives the company more time to find solutions and that they will provide additional information at an appropriate time.
The problem with the big lender is that they lend 3AC with little or no mortgage. As 3AC has financial problems and is now insolvent, the chances of recovery of the loan are slim.
According to a Voyager report, the company’s net assets are valued at more than $658 million, with loan assets approximately $1.2 billion but mortgage amounts exceeding $168 million.
During the liquidity crisis, Sam Bankman-Alameda Fried’s ventures provided some bailouts to lenders, notably Voyager and BlockFi. The CEO of the FTX exchange made a loan of $485 million to Voyager Digital and $400 million to BlockFi.
In addition to these bailouts, FTX is inking an acquisition deal with BlockFi. Banksman-Fried and FTX seem to be playing a godlike role, stepping in and saving troubled firms to stop the collapse altogether.
Is Sam Bankman-Fried the Central Banker of Cryptocurrency? What Sam is doing is very similar to what JP Morgan did during the terror of 1907.
If these bailouts work, FTX (and Sam, of course) could make a fortune in the long run. Otherwise, it could crash completely and lead to massive runs on all exchanges including FTX.
Several sectors, particularly NFTs, were significantly affected in relation to the market collapse. Ethereum (ETH), the blockchain that accounts for 84.7% of the NFT market share, is also experiencing a similar fate to that of bitcoin, as it has closed a series of red candles in recent weeks.
Another significant change this quarter is the dramatic increase in the Fed’s interest rates to combat high inflation. Since March 2022, the bank has increased interest rates by 1.5 points, and other central banks are following it until the end of the year.