Creditor details updated: Three Arrows Capital owes a total of $3.5 billion to 27 crypto companies
Genesis is the largest creditor of 3AC, having lent $2.3 billion to the now-bankrupt crypto hedge fund. The co-founder of 3AC, Zhu Su, and the wife of another co-founder, Kyle Davies, are both creditors of the fund.Authors: Yogita Khatri & Ryan Weeks & Tim Copeland, The Block
Original Title: 《Three Arrows Capital creditors lent bankrupt fund $3.5 billion, court documents show》
Translation by: Nian Yinsi Tang, Odaily Planet Daily
According to court documents released yesterday by the liquidators of Three Arrows Capital (3AC), the now-bankrupt crypto hedge fund owes $3.5 billion to 27 cryptocurrency companies.
The largest creditor on the list is Genesis Asia Pacific Pte Ltd., a subsidiary of Digital Currency Group (DCG) under Genesis Global Trading, which has provided a total of $2.3 billion in loans to 3AC. Genesis CEO Michael Moro recently stated that DCG has taken on some of Genesis's debt, but it is currently unclear how much debt remains with Genesis.
According to a court document, Genesis Global Trading has filed a $1.2 billion claim against the now-bankrupt Three Arrows Capital. The document shows that Genesis Asia Pacific Pte. Ltd. is making a claim against 3AC for $1.14 billion in assets and collateralized AVAX and NEAR tokens worth a total of $91.3 million.
Some of the collateral for these loans includes 17.4 million GBTC shares, 446,928 ETHE shares, 2.7 million AVAX tokens, and 13.9 million NEAR tokens, all of which have been liquidated by Genesis.
Before the collapse of the Terra ecosystem in May, 3AC had grown to become one of the largest hedge funds in the crypto industry, and the Terra crash caused significant losses for 3AC.
Details of the loans from 3AC were disclosed in a 1,157-page legal document uploaded online by Teneo on Monday. Teneo was appointed last month to oversee the liquidation of 3AC. This document outlines the claims against 3AC. A few days after a court in the British Virgin Islands appointed Teneo as the liquidator, 3AC filed for bankruptcy protection under Chapter 15 of the U.S. Bankruptcy Code in a New York court to protect its U.S. assets during the liquidation process in the British Virgin Islands.
A spokesperson for DCG told The Block: "Both DCG and Genesis's balance sheets remain strong. With the risk exposure to Three Arrows Capital now eliminated, Genesis continues to maintain a healthy capital position, and its operations have returned to normal."
Other Creditors
Following Genesis, the recently bankrupt Voyager Digital LLC provided over $685 million in loans to 3AC in the form of Bitcoin and Ethereum—this amount is calculated based on current cryptocurrency prices.
Other notable creditors of 3AC include DRB Panama Inc., the parent company of the crypto exchange Deribit, which lent 3AC 1,300 BTC and 15,000 ETH, valued at approximately $51 million at current prices; Celsius Network, which provided around $75 million in USDC loans to 3AC; CoinList Services, which provided $35 million in loans; and FalconX, which provided $65 million in loans.
Kushagra Shrivastava, Vice President of Operations and Partnerships at FalconX, declined to comment on the amount of loans provided to 3AC, stating he could not provide details related to specific client relationships. However, he told The Block that FalconX "has no significant risk exposure or losses," adding that the platform's average collateralization rate exceeds 160%.
"Unlike other major lending institutions in the space, all credit on FalconX is over-collateralized with highly liquid collateral (excluding GBTC), and is extended within our closed-loop ecosystem, allowing FalconX to maintain ownership and control over these assets," Shrivastava said.
He added, "Thanks to strong risk management, a market-neutral approach, and leveraging real-time on-chain analytics, FalconX has emerged from the liquidity crisis stronger than ever. Our balance sheet is the largest it has ever been. Despite poor market conditions, we continue to extend credit and expand our lending business."
When contacted for comment, a spokesperson for CoinList told The Block: "We lent some assets to 3AC from our own balance sheet, and they have defaulted on this loan. We are currently in legal proceedings to recover these assets. Their default will not affect any user funds, only the assets on our own balance sheet. We completed a $100 million Series A funding round in October 2021, which is sufficient to provide years of operational runway (even if we do not recover any loan assets), and we will continue to help launch some of the best projects in the crypto space."
These companies are all creditors in the 3AC bankruptcy proceedings, seeking to recover funds. Interestingly, 3AC co-founder Zhu Su and the wife of co-founder Kyle Davies, Chen Kelly, are also among the creditors, with claims of $5 million and $65 million, respectively.
Additionally, some of these creditor companies have used Bitcoin, other crypto tokens, or shares of the Grayscale Bitcoin Trust (GBTC) as collateral.
Other creditors listed in the documents include SBI Crypto, Equities First Holdings, Tower Square Capital, Ashla International Inc, Plutus Lending LLC (also known as Abra), Moonbeam Foundation, Moonbase One, and PureStake.
Furthermore, according to three informed sources, a creditors' committee for Three Arrows Capital has been formed, consisting of five members. Sources say the committee is made up of Digital Currency Group (DCG), Voyager, CoinList, Blockchain.com, and Matrixport. Creditors vote based on their voting power (size of claims), ultimately selecting these five members.
