Another Crypto Lender Confirms Exposure to Three Arrows Capital

Genesis Trading confirmed its exposure to bankrupt hedge fund Three Arrows Capital (3AC). In a series of tweets, its CEO Michael Moro revealed that the cryptocurrency lender and broker had mitigated its losses.

• The executive said that Genesis sold collateral and hedged its downside after 3AC failed to meet a margin call in June.
• Moro revealed that the company’s loans to the hedge fund had a weighted average margin requirement of over 80%. The total loan amount is not known.

3/ The loans to this counterparty had a weighted average margin requirement of over 80%. Once they were unable to meet the margin call requirements, we immediately sold collateral and hedged our downside.

— Michael Moro (@michaelmoro) July 6, 2022

• As the lender seeks to recover residual losses, Moro said that its parent company, Digital Currency Group, has assumed certain liabilities of Genesis related to 3AC to ensure that it has sufficient capital to operate and scale its business for the long term.
• Genesis is said to have been facing potential losses due to exposure to 3AC as well as Hong Kong-based crypto lender Babel Finance.
• The once top VC in the space, 3AC’s downfall sent shockwaves to the entire crypto market.
• The Monetary Authority of Singapore (MAS) previously stated that the hedge fund provided misleading information to the regulator and also exceeded the assets under the management (AUM) threshold permitted for a registered fund management company (RFMC).
• One of the most impacted brokerage firms was – Voyager – which filed for bankruptcy a few weeks after giving 3AC a deadline to fulfill a $657 million loan repayment.
• A closer look at Voyager’s balance sheet revealed concerning figures with 58% of its loan book consisting of loans to 3AC.