"Aftermath of Terra Incident"... Cryptocurrency Fund Managing 4 Trillion Won Faces Bankruptcy Risk

[Image source=Yonhap News]

[Asia Economy Reporter Minyoung Kim] A cryptocurrency hedge fund that managed nearly 4 trillion won in investments is facing bankruptcy due to the collapse of Korean coins Terra and Luna and the Bitcoin crash.

The Wall Street Journal (WSJ) reported on the 17th local time that cryptocurrency hedge fund Three Arrows Capital is considering asset sales and bailout requests to cope with demands for repayment of investments and loans.

The company had borrowed Bitcoin for investment purposes from cryptocurrency lenders such as BlockFi, but recently failed to meet additional margin calls due to the price crash, resulting in forced liquidation of collateral assets provided to the lenders.

Cryptocurrency specialized media CoinDesk reported that this forced liquidation has put Three Arrows at risk of bankruptcy.

Kyle Davies, the founder, said he hired legal and financial experts to deal with repayment demands from investors and lenders, stating, "We are committed to finding a fair solution for everyone."

Three Arrows is a cryptocurrency fund that has been operating for nearly 10 years and managed investment assets worth $3 billion (about 3.9 trillion won) as recently as April.

However, it suffered heavy losses from the collapse of the stablecoin TerraUSD (UST) and its sister cryptocurrency Luna last month, and this month, with the crash of major cryptocurrencies Bitcoin and Ethereum, it has been pushed to the brink of bankruptcy.

Founder Davies said, "The Terra and Luna incident caught us off guard, and the recent crash of Bitcoin and others in the past few weeks has caused more problems," adding, "It is affecting other cryptocurrency companies like a contagion."

This content was produced with the assistance of AI translation services.