Three Arrows Capital goes missing for two weeks, Voyager Crypto Broker issues default notice, Kyber Treasury also hit hard

Despite the increasing number of crypto institutions involved, Three Arrows Capital, 3AC, remains silent externally. It has been over two weeks since Zhu Su's tweet indicating ongoing negotiations with various parties, but the situation seems to have vanished into thin air. The situation of 3AC has also been compared to LTCM, a highly successful Wall Street arbitrage institution in the 1990s, which went bankrupt overnight due to excessive leverage and black swan events.

Voyager Digital

The cryptocurrency broker Voyager Digital previously disclosed that 3AC has over $650 million in outstanding loans and has failed to make necessary payments on their 15,250 BTC, $350 million USDC loan. Consequently, they announced a reduction in daily withdrawal limits from $25,000 to $10,000 for those affected.

On June 27, Voyager Digital also released a press release issuing a default notice to 3AC. Voyager has hired Moelis & Company as financial advisors and is exploring available legal remedies.

Similar to lending platform BlockFi, which faced a liquidity crisis, Voyager has secured a credit line of over $500 million in assistance from Alameda.

Other Affected Institutions

1. 8BlocksCapital June 16｜Their trading director stated early in the 3AC crisis that they had a contract with 3AC since 2020 to share trading accounts by paying service fees, but 3AC recently misappropriated $1 million and completely ignored their attempts to contact them.

2. Finblox June 16｜Finblox paused reward distributions as 3AC was both an investor and borrower on their platform.

3. Deribit June 16｜3AC has been a shareholder since February 2020, but Deribit stressed that their finances and operations were not affected.

4. Genesis June 17｜Rumors from the founder of Messari suggest that Blockfi, Genesis, and 3AC all have lending relationships.

5. Kyber Network June 23｜Having built over a three-year trust relationship with 3AC, Kyber may be impacted by 3AC's potential bankruptcy as 3AC holds a small portion of Kyber's treasury assets.

The Rise and Fall of LTCM

Research firm FSInsight compared 3AC to Long-Term Capital Management, LTCM, a long-term capital management company with a notable quantitative trading team in 1998, including Nobel laureates Myron Schols and Robert Merton.

Both shared similarities in their team's financial expertise and use of high leverage strategies, initially achieving great success.

LTCM collapsed in 1998 due to the Black Swan event when the Russian Prime Minister announced the devaluation of the ruble, suspended the government bond market, and ceased paying interest on government bonds. Within a week, LTCM went from a top institution to bankruptcy, needing assistance from 14 banks for a bailout and capital restructuring.

At its peak, 3AC's assets under management (AUM) exceeded $18 billion, compared to LTCM's net assets of $4.8 billion at the end of 1997. 3AC's assets were highly leveraged, but the exact amount of losses incurred by 3AC is currently unknown.