Cryptocurrency Blockchain.com will lose $270 million for lending to the hyper-leveraged hedge fund Three Arrows Capital, which is currently subject to a liquidation order in the British Virgin Islands.
“Three Arrows Capital Bankruptcy Will Cause $270 Million Loss”
In a letter to shareholders, Peter Smith, CEO of Blockchain.com, said:
“Three Arrows Capital is rapidly heading for bankruptcy, and the default effect of this company will be approximately $270 million in US$ and crypto assets acquired from Blockchain.com.”
Three Arrows Capital, which boasted billions of dollars in assets under management earlier this year, collapsed as a result of the combination of falling crypto prices and poor risk management, leaving many crypto lenders in trouble.
Blockchain.com CEO Says Company’s Customers Will Not Be Affected
Smith stated that the Three Arrows company has borrowed and repaid over $700 million in cryptocurrencies to which Blockchain.com is a party in four years. Smith also stressed in the June 24 letter that Blockchain.com “remains liquid and robust and its customers will not be affected.”
About a week ago, it was reported that Blockchain.com and derivatives exchange Deribit were among the creditors pressing for the liquidation of Three Arrows, also known as 3AC. In a Bloomberg News report, Smith said that 3AC was “defrauding the crypto industry”, adding that this company aims to “hold them accountable to the end of the law.”
A person familiar with Blockchain.com’s financial situation told CoinDesk that the company is in good shape to recover from losses.
“We do not feel that there is any pressure on the institution,” said the person in question.
Founded in 2011, Blockchain.com is recognized as one of the longest running startups in the cryptocurrency industry.
*Not investment advice.