(FT) Crypto hedge fund Three Arrows Capital is facing liquidations from firms led by BlockFi after it failed to meet margin calls over the weekend.
Crypto lender BlockFi, liquidated some holdings of Three Arrows to cut its risk exposure by taking collateral that the fund had put down to support its borrowing.
The liquidations follow concerns of a liquidity crisis for crypto funds. Last week, Celsius blocked withdrawals, citing “extreme market conditions.”
BlockFi’s chief risk officer, Yuri Mushkin, said that the firm exercises the best business judgment with a large client following failure to meet its obligations. BlockFi said that it held collateral that was in excess of the size of the loan.
Three Arrows is known for making bullish leveraged bets on crypto. Last month, the firm’s co-founder acknowledged that the current crypto sell-off proved him wrong, although he expects the market to recover.
Three Arrows had reportedly big bets on Luna, which crashed in May. The fund also had holdings in crypto ventures, with exposures in Avalanche, Solana, and Axie Infinity. Other exposures of Three Arrows are believed to be in units of the Grayscale bitcoin trust.
BTCUSD is up +2.48%.
