Three Arrows Capital Gets Liquidation Order from BVI Court

A court in the British Virgin Islands (BVI) has ordered the liquidation of Singapore-based Three Arrows Capital (3AC), a cryptocurrency-focused hedge fund, according to a Sky News report.

Though there is no official confirmation, the court order was issued on June 27, and partners from Teneo Restructuring were tasked with the insolvency process. However, the implications to the creditors of the company are still unclear.

Established in 2012 by Su Zhu and Kyle Davies, 3AC is one of the most prominent cryptocurrency hedge funds, and is known for its high leveraged positions.

The worries of 3AC started with the recent cryptocurrency market downturn. It incurred a loss of at least $400 million earlier this month.

Loan Default

The fund also defaulted on a more than $670 million loan recently. According to a notice issued by Voyager Digital on Monday, the fund did not repay the loan, $350 million of which were in USD-pegged  stablecoin 
Stablecoin

Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including gold, silver, or others. Advantages of StablecoinsOf note, stablecoins redeemable in currency, commodities, or fiat money are also said to be backed, whereas those tied to an algorithm are not considered to be so.There are several advantages of asset backed crypto. First, these coins are stabilized by assets that fluctuate outside of the crypto space, that is. This can help mitigate the financial risk associated with these assets.For example, Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape periodic price falls. Stablecoins control for this vulnerability, allowing for the diversification of risk in a portfolio.Stablecoins also possess a mechanism for redeeming the asset backing them. This grants an additional level of confidence associated with the coin and are…