Singapore-based cryptocurrency hedge fund, Three Arrows Capital, has suffered a significant loss in investment due to the meltdown in the crypto market, causing losses to other digital currency creditors.
As of March, Three Arrows Capital held $10 billion in assets, part of which were invested in budding crypto assets and household names like Terra Luna. However, the capital is now zero due to crypto crash.
Three Arrows Capital had borrowed capital to invest in these nascent crypto project from digital currency creditors and exchanges, with Blockchain.com lending the hedge fund manager $270 million and Voyager Digital offering about $670 million loan, CNBC had reported on Monday.
Both Blockchain and Voyager Digital are now struggling to retrieve their funds extended to Three Arrows, known as 3AC, following the Terra & Luna crash that saw investors lose about $60 billion.
3AC had invested about $200 million in Luna, it had informed Wall Street Journal, while other reports disclosed that the investment could be around $560 million.
But their loss was beyond Luna, considering their investment spreads across other budding crypto projects that hit a downward trend in response to bitcoin and ethereum crash.
Three Arrows invest in crypto projects to help investors hedge their money against inflation, but the crypto market meltdown had wiped off over $1 trillion from the market capitalisation, affecting every investors funds.
Other affected cryptocurrency businesses that lend to Three Arrows Capital are crypto exchange FTX, crypto derivatives platform BitMEX, and crypto lenders, Genesis and BlockFi.
A professor of finance and business economics at the University of Southern California, Nik Bhatia, said, “Not only were they not hedging anything, but they also evaporated billions in creditors’ funds.”