Three Arrows misses marginal call on loan, causing BlockFi to liquidate collateral

The relationship between Three Arrows and Block Fi.

Three Arrows Capital LTD. is a Singapore-based hedge fund company that was established in 2012 and aims to provide superior risk-adjusted returns. The company was founded by Su Zhu and Kyle.

In 2020, Three Arrows then bought bitcoins on credit from the US crypto lending platform BlockFi. Until 2021, Three Arrows’ situation was quite stable as the market was performing as the company’s expectations. The start of 2022 saw the downfall of the company and when the market implosion happened in May, the hedge fund company was shattered to say the least.

The hedge fund firm took credit for bitcoins from the crypto lending platform and falling bitcoin and Ethereum prices made matters worse for Three Arrows. According to a report, the crypto lending firm has gone ahead and liquidated the hedge fund firm’s positions to some extent.

Failure to respond to marginal call on loan.

If the reports are to be believed, then Three Arrows Capital actually failed to respond to the fringe appeal on the loans it had taken from BlockFi, which ordered BlockFi to liquidate the fund company’s positions. speculative.

It is also believed that the liquidation process took place both with the consent of the party and mutually. CEO and co-founder of the hedge fund firm Kyle Davies chose to remain silent and not comment on the liquidation carried out by BlockFi.

Comments from BlockFi CEO.

Photo credits: CoinDesk

In a tweet, BlockFi CEO Zac Prince claimed that his company had gone ahead and liquidated the collateral of a large company’s position against an offered loan. Further, he quoted that “We have fully accelerated the loan and fully liquidated or covered all associated collateral.”

Hedge Fund’s attempts were unsuccessful.

Three Arrows Capital had in fact tweeted on Wednesday about the situation it found itself in and also claimed that it was committed to sorting things out. Discussions of Three Arrows’ liquidation issues were already making the rounds on the market and on social media. The co-founder also tweeted, “We are in discussions with the appropriate parties and are fully dedicated to resolving this issue.”

Conclusion:

In the situation the hedge fund company finds itself in, there are no more options for the company to hold the collateral given the current market situation and the direction the market is heading. Some crypto experts also believe that the market is entering the most dreaded phase called “Crypto Winter” and may lead to shattering investment losses in the near future.