In a recent Twitter thread, Genesis CEO Michael Morrow said that “large counterparties that failed to meet a margin call” mentioned Last month, Singapore-based fund Three Arrows Capital (3AC) was troubled by institutional crypto broker.
“We said earlier in June that we mitigated our losses in relation to a major counterparty who failed to meet margin calls,” Told Moro. “Now that the BVI bankruptcy process has begun, we can confirm that the counterparty was Three Arrows Capital.”
The news heats up on the heels of a court in the British Virgin Islands Order to terminate 3AC its property. Due to the public nature of the order, Moro is now able to identify who the larger counterparty was.
He explained that the collateral used for the loan was sold “immediately” to protect the firm.
4/ Since then, we have worked together @DCGco To find the optimal strategy to further isolate the risk. DCG has assumed certain liabilities of origin related to this counterparty to ensure that we have the capital to operate and grow our business over the long term.
Like defaulting on a loan, a margin call occurs when investors speculating with borrowed money fall below the broker’s maintenance margin. In this case, Morrow stated that 3AC had a maintenance margin of “a weighted average requirement of more than 80%,” meaning that 3AC was required to maintain this amount of value before selling its collateral.
Notably, Moro’s parent firm, Digital Currency Group (DCG), also took some losses “to be sure”. [Genesis has] Capital to operate for the foreseeable future”.
decrypt Origin has been contacted to determine how much the loan was valued in dollar figures and the extent to which DCG aided in the firm’s shortfall.
Three Arrows, Genesis and Crypto Transitions
This isn’t the first time that 3AC, founded by Su Zhu and Kyle Davis, has been scrapped.
Following The collapse of Terra’s UST stablecoin And in May its sister governance token LUNA, 3AC has repeatedly emerged as a major counterpart to several other crypto firms. At the time, it was reported that the fund had lost about $200 million, with Davis telling the Wall Street Journal that “the situation at Terra-Luna bothered us greatly.”
Once Bitcoin Other trading platforms, including BitMEX, also began to falter. ftxand Deribit, all announced that they had liquidated 3AC’s positions after the latter failed to meet similar margin calls.
Crypto lending platforms Voyager and BlockFi both suffered major losses after each 3AC liquidation.
BlockFi has since agree to the terms of the acquisition Crypto Exchange with FTX and Voyager filed Chapter 11 bankruptcy for tomorrow.
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