cryptocurrency
Bulletins

Three Arrows Capital's $3.5 billion debt is spread across the crypto industry

The damage from the crypto hedge fund's bankruptcy across the industry is extensive, with some of its creditors in bankruptcy themselves.

three gold-colored bitcoins on black surface

Three Arrows Capital has many crypto counterparties.

Photo: Dmitry Demidko /Unsplash

One of the crypto industry's top hedge funds owes 27 companies $3.5 billion, an indication of the extensive connections the firm, Three Arrows Capital, had across the industry. It also shows the wide impact one firm can have when many firms are borrowing or lending from each other. Some of the creditors are themselves in bankruptcy proceedings.

Genesis Asia Pacific Pte Ltd, a unit of the Genesis crypto prime broker, which is owned by Digital Currency Group, is the largest creditor, with a roughly $2.3 billion loan to 3AC, according to the filing.

Genesis had a 80% margin requirement on the loan and has sold collateral related to the loan, according to The Block. Digital Currency Group has assumed some of Genesis' liabilities.

Crypto exchange Voyager, another troubled crypto firm that has filed for bankruptcy, had a loan to 3AC of $350 million in USDC plus 15,250 BTC worth about $680 million at its present value.

Crypto lender Celsius, which also filed for bankruptcy, had a loan of about $75 million in USDC.

Other lenders included FalconX and DRB Panama, the owner of crypto exchange Deribit, among others.

An affidavit attached to the filing by Charles McGarraugh, chief strategy officer of Blockchain.com, another 3AC creditor, says that the co-founders of Three Arrows, Zhu Su and Kyle Davies, made a down payment on a yacht valued at $50 million. Zhu also reportedly is trying to sell a $35 million mansion in Singapore.

Correction: An earlier version of this story misspelled Deribit. This story was updated on July 18, 2022.

Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. He was also as a staff writer at Forbes covering social media and venture capital, and edited the Midas List of top tech investors. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

cryptocurrencythree arrows capitalbankruptcyzhu sukyle davies
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