Crypto lending platform BlockFi has liquidated at least some of its hedge fund Three Arrows Capital (3AC) positions. This is reported by the Financial Times, citing knowledgeable sources.

In 2020, 3AC became the lender’s strategic investor. A year later, the fund exited its capital and borrowed large amounts of bitcoin, but due to the prevailing market situation, it was unable to meet its margin requirements. One of the interlocutors of the publication noted that the position was closed by mutual agreement of the parties.

BlockFi CEO Zach Prince indirectly confirmed the information to the FT. On its Twitter page, it wrote that the company recently “made its best business decision on a client who failed to meet its overcollateralized margin loan obligations.”

No client funds are affected. We believe we are one of the first to take action with this counterparty.

— Zac Prince (@BlockFiZac) 16 June 2022

“We have accelerated loan repayment and fully liquidated or hedged the debt associated with it. Client funds were not affected. We believe we are one of the first to take action against this opposing side,” Prince wrote.

An analyst named FatMan said Three Arrows Capital has a “heavy debt” to BitMEX crypto derivatives exchange, citing “trusted sources.” According to him, the fund took several positions with insufficient collateral.

Verified sources have confirmed that 3AC has a large debt to BitMEX, a popular cryptocurrency exchange. 3AC reportedly took several unsecured positions, creating unsecured debt. Creditors who contacted me confirm that 3AC is still unreachable.

— FatMan (@FatManTerra) 16 June 2022

The 3AC crisis has affected the entire cryptocurrency industry as many major projects are related to hedge funds.

Beware of these assets.

These are the primary assets of 3AC.

They will probably try to empty it during upcoming unlocks. pic.twitter.com/ozXP8HcdXe

— Miles Deutscher (@milesdeutscher) 16 June 2022

Finblox, one of the structure’s portfolio companies, has suspended the distribution of customer rewards and its referral program. It also lowered withdrawal limits and banned new users from creating cryptocurrency addresses.

IMPORTANT UPDATE FROM FINBLOX! pic.twitter.com/VjclRMMiSe

– Finblox (@finblox) 16 June 2022

3AC spearheads LUNA token sale LFG $1 billion In May, the Terra ecosystem collapsed and the local cryptocurrency nearly lost value.

The fund has also invested in the Avalanche blockchain platform, whose native token showed one of the worst dynamics in the market last month. According to CoinGecko, the price of AVAX has dropped 52% in the last 30 days.

On June 17, the project stressed that 3AC “never manages, uses or holds the Avalanche Foundation’s treasury funds.”

Due to recent speculation, we would like to clarify that 3AC does not in any way administer, use or store Avalanche Foundation treasury funds.

– Avalanche 🔺 (@aalancheavax) 16 June 2022

Three Arrows Capital is one of the Grayscale Bitcoin Trust’s largest investors. According to the report for SEC As of December 31, 2021, the fund held approximately 39 million GBTC units ($1.2 billion at the time). According to YCharts, the trust’s shares are trading at a 33% discount to their net asset value under management.

An anonymous author of The DeFi Edge newsletter reports on a series of failed investments and related don’t deserve 3AC limits do not have enough liquidity to cover margin calls.

How much LIQUID is 3AC?

We know 3AC has made great investments, but most of the tokens have been locked and illiquid for years.

So if they are getting margin calls, it will be difficult for them to repay the loans if they have no liquidity.

— The DeFi Edge 🗡️ (@thedefiedge) 16 June 2022

“A smart person can go bankrupt in three ways: alcohol, ladies and trump,” said Charlie Munger, vice president of Berkshire Hathaway’s board of directors.

The author also highlightedThat 3AC offers financial management services to some portfolio companies and projects.

Recall that on June 16, trading company 8 Blocks Capital accused Three Arrows Capital of using client funds to cover margin calls.

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