This might be old news to many, but t those who are not yet aware, the crypto crash has claimed another victim. The death reaper visits one cryptocurrency project after another and claims their lives. The most recent victim of the cryptocurrency crash is 3AC or Three Arrows Capital. This is one of the best cryptocurrency hedge funds developed. The company has been around for slightly over a decade. It has created a following, and many people know about the company and its work. This is one of the main reasons why the company was able to get so many lenders willing to offer them millions of dollars to invest in their various projects.
3AC strategy
According to reports from the last quarter’s performance, the company was valued at $10 billion by March 2022. This included their assets and their investments in other projects all over the world. The company is currently filing for bankruptcy, which means it can be valued at $0, most likely less considering its debt. The company’s had a peculiar strategy that may be one of the reasons why they are currently the biggest flop.
Their strategy was copied from other hedge funds, although they applied it to the wrong market this time. They used their history as good investors and borrowed huge amounts of money from various lenders. Once they received the money, they then invested it in different upcoming projects that helped them make profits. The profit had to be huge enough to pay the principal and the interest acquired from the money borrowed. Their main target was nascent crypto projects. This worked great for them for the last the ten years they were in operation. To their dismay, the crypto crash was one external factor they did not consider.
Truth be said, nobody could have predicted such a huge turn of events in the market. This is considering the information people had before the market’s collapse. Their problems started, like many other investors, with the fall of Terra USD. Thousands of investors had invested in the stablecoin that had promised stability no matter how volatile the market was or would become. The token promised its investors a 20% annual yield, which is a good return on investment. After the token collapsed, 3AC suffered a huge blow to its finances which was the beginning of its problems.
Conclusion
Considering that the company had many lenders, it is a safe bet that these lenders are why the company is filing for bankruptcy. After losing its investment in Terra USD, the company could not pay back the money it received from its lenders. This move had a huge blow on investors, with some filing for bankruptcy due to their funds vanishing into thin air after 3AC lost most of its value. Some of the hit hardest companies include Blockchain.com, which lost $270 million they had invested in the company. But the biggest victim has to be Voyager. They lost $670 million and filed for bankruptcy due to lost revenue.
