The two firms and their involvement with the liquidation of Three Arrows Capital
Genesis CEO confirms exposure to troubled hedge fund
Genesis CEO Michael Moro spoke on his company’s involvement with Three Arrows Capital and how the “counterparty failed to meet a margin call” The situation was explained in a Twitter thread that he wrote in order to explain the situation and give transparency to his clientele.
In the Thread, Mr. Moro explained how the company wanted to mitigate losses and thus sold the collateral to protect the firm.
To understand the situation you would need to understand a margin call. A margin call occurs when speculating investors with money that has been borrowed falls below the maintenance margin of the broker. Moro explained that 3AC had a maintenance margin with a “weighted average requirement of over 80%.” What this means is that before selling off their collateral 3AC needed to maintain that amount.
Three Arrows has been ordered to liquidate by a British Virgin Islands court order as the firm was unable to survive the crash of Terra and its UST stablecoin. The Terra situation has caused much trouble in the crypto space with multiple companies having to claim bankruptcy.
The fall of Terra led to other coins such as Bitcoin dropping in value as well. Once Bitcoin dropped other platforms such as BitMEX, FTX, and Deribit announced the liquidation of Three Arrows positions as well once 3AC was unable to meet their margin calls. Other companies have been damaged by the fall of Terra as well, one of which being Voyager Digital which was recently given a line of credit by FTX’s Sam Bankman-Fried.
Alameda Research Actually Owes Voyager Money
The Sam Bankman-Fried crypto trading firm owes $377 million to Voyager. The company is the second-largest borrower after the now liquidating Three Arrows Capital. This revelation comes from the filing of Chapter 11 bankruptcy by Voyager. Alameda recently extended a $500 million line of credit to Voyager Digital while already owning a debt to the company of $377 million, this of course is less than the $600 million owed to it by Three Arrows Capital.
The bankruptcy filing shows all of the companies that owe money to Voyager and lists Alameda as one of the top five right under Three Arrows.
The table above is from the 13th page of the bankruptcy filing that was submitted in New York and shows Alameda owes Voyager $377 million with an interest rate of 1–5%.
Many companies realized the situation with Three Arrows was dire as the company was unable to pay back loans due to the $200 million lost in the collapse of Terra. 3AC( Three Arrows Capital) was then ordered by a BVI court to liquidate meaning all operations were to cease and desist and the company would allow the court to oversee the selling of all assets to offset its debts- one of those debts being to Voyager.
Bankman-Fried has a vested interest in seeing Voyager succeed and come back from the brink. Alameda and Alameda Ventures once were the largest Voyager shareholders, holding 11.6% of outstanding shares around June. The stock was trading at a bit over $1 but saw a drop to $.56 per share after Alameda announced a surrendering of 4.5 million of its shares worth $2.6 million. This surrender in shares was meant as a strategy to be below the 10% threshold that would have considered the company an insider in the eyes of the SEC