• Cryptocurrency exchange Deribit claims Three Arrows failed to repay $80 million.
  • The derivatives site claims that the hedge fund leveraged the loans to increase its bets in the cryptocurrency market.
  • Two prominent crypto financial services firms, BlockFi and Genesis, liquidated Three Arrows’ investments last month.

Three Arrows Capital was liquidated this week after cryptocurrency exchange Deribit claimed the crypto hedge fund failed to repay $80 million, underscoring the depth of the notorious company’s liquidity crunch. investment in digital assets.

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According to documents filed in British Virgin Islands courts, the investor refused to repay the money after derivatives site Deribit reversed Three Arrows’ positions to meet a margin call precipitated by market volatility. digital assets last month.

The allegations highlight the extent to which Three Arrows leveraged the loans to increase its bets in the cryptocurrency market. Two major crypto financial services firms, BlockFi and Genesis, liquidated some of Three Arrows’ investments last month after the company failed to pay margin calls after its bets went bad.

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According to the exchange, Three Arrows was one of the company’s most active participants and a shareholder of Deribit. The investment company’s struggles have exacerbated the credit crunch in the digital asset market.

According to court filings by Deribit, Three Arrows borrowed bitcoin and ether from the derivatives exchange in March 2020, when the pandemic was at its peak. Three Arrows violated Deribit’s loan requirement for a minimum account balance on June 11, 2022, when the value of cryptocurrencies plummeted.

According to court documents, Deribit began liquidating Three Arrows’ assets two days later, and on June 15 it terminated the loan agreement and demanded repayment of outstanding loans, interest and debt. negative asset value of the account.