The “bloodbath” in the cryptocurrency sector could be another victim, with co-founder of multimillion-dollar hedge fund Three Arrows Capital using Twitter in an attempt to combat rumors that the company is insolvent after the market collapse .
With a net worth of $ 18 billion (Ā£ 14.9 billion) in its latest public statement, the Singapore-based hedge fund was known to take large, well-leveraged stakes in cryptocurrencies and cryptocurrencies directly. It holds positions in cryptocurrencies such as bitcoin, Ethereum and Solana, as well as equity investments in companies such as the BlockFi and Deribit options trading platform.
The turmoil in the crypto markets has substantially reduced the value of these holdings and eliminated some other holdings that the fund, known as 3AC, has assumed, including the doomed project of “algorithmic stable currency” Land and the game “play to win “Axie Infinity, who was the victim of $ 700 million in hacking at the end of last year, is accused of hacking sponsored by the state of North Korea.
Zhu Su, the Dubai-based investor behind the crypto-focused trading house, tweeted on Wednesday morning that “we are in the process of communicating with relevant parties and we are fully committed to resolving it.”
We are in the process of communicating with the relevant parties and are fully committed to resolving it
– Zhu Su šŗ (@zhusu) June 15, 2022
With traders already suffering injuries after a 25% drop in the price of bitcoin in a single day, triggered by the announcement of the ersatz crypto bank Celsius that it would suspend withdrawals, Zhu’s statement began a another day of turmoil in the cryptographic sector. Binance CEO Changpeng Zhao described the situation as a “bloodbath”.
The value of Bitcoin continued to fall on Wednesday, to just over $ 20,000, 70% below its all-time high of $ 69,000 in November.
Tether, the centralized stable currency of systemic importance to the broader cryptocurrency sector, issued a statement denying any loss of 3AC or Celsius.
“The Celsius position has been settled at a loss for Tether,” the company said. “Tether’s lending activity with Celsius (as with any other borrower) has always been over-collateralized. Tether currently has zero exposure to Celsius, apart from a small investment made with Tether’s capital in the company.” .
The company had previously told the Financial Times that its Celsius loans were on a 30% overdraft guarantee, meaning it had taken $ 1.30 in bitcoins for every $ 1 it lent.
Celsius added: “Tether is aware that other rumors are spreading, suggesting that he has a credit exposure to Three Arrows Capital; again, this is categorically false.”
The company also dismissed claims that its large holdings of commercial paper (short-term loans to companies) were held in disproportionately risky investments. He also said he intended to replace those holdings with U.S. Treasury bonds, although he did not offer any date for which such a change was intended to have taken place.
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On Wednesday, the Tron DAO Reserve Project, which supports the USDD’s algorithmic stable currency, announced that it was withdrawing more than $ 100 million worth of cryptocurrency from Binance in order to support the fixing of the dollar of its stable currency, which had dropped to $ 0.97 on crypto exchanges. This led to fears that the stable currency could follow in the footsteps of its UST of a similar structure, the collapse of which precipitated the last crisis.
Teunis Brosens, chief economist in digital finance at Dutch bank ING, said that while the circulation of cryptocurrencies could be explained in part by broader market conditions, the recent collapse of the Terra stablecoin project had sparked a deeper concern about the overall viability of some of the lesser-known digital assets. “Crypto investors have become very critical, especially about more complex products, and want to get out. There may still be confidence in bitcoin and Ethereum, which are the simplest currencies, but as people escape out of complex products, entities like Celsius have to liquidate their conventional currencies like bitcoin and Ethereum, which only makes their price lower. ā
On Tuesday evening, Bill Gates warned that the Crypto industry was a bubble economy, “100% based on the theory of the biggest idiot,” the idea that the profits come from finding someone dumber than you to whom to sell the your assets. āIām used to asset classes … like a farm where they have production or like a company where they make products,ā Gates said.