Big blow to crypto market! Top crypto hedge fund Three Arrows Capital files for bankruptcy

New Delhi: Top crypto hedge fund Three Arrows Capital (3AC) has filed for bankruptcy in the US, days after its liquidation began in the British Virgin Islands, the media reported on Saturday. The liquidation, and now Chapter 15 bankruptcy in New York, comes as popular crypto tokens such as Bitcoin and Ethereum nosedived by nearly 70 per cent from their record highs amid the economic meltdown.

According to court documents seen by the Financial Times, crypto options and futures exchange "Deribit claimed Three Arrows failed to repay $80 million, as financial woes have plagued the hedge fund".

"The company is or is likely to become unable to pay its debts as they fall due, and is therefore insolvent," claimed Deribit. 

The Monetary Authority of Singapore this week slammed Three Arrows for providing false information and breaching an asset under management threshold, the report noted.

The mega fund, founded by Credit Suisse traders Zhu Su and Kyle Davies, once managed an estimated $10 billion in assets.

Its insolvency has forced major industry players to reshuffle operations and limit customer withdrawals amid a crypto selloff that seemed to catch plenty of mega firms off guard, according to The Verge.

On Friday, beleaguered crypto lending firm BlockFi announced a deal with leading crypto exchange FTX US, saying it had lost around $80 million from its dealings with Singapore-based 3AC.

The Chapter 15 bankruptcy will allow the foreign firm to protect its stateside assets while the liquidation is carried out in the British Virgin Islands.