The list of collateral victims of the liquidity crunch currently affecting crypto lenders is far from fully known.
If indeed we already have two dominoes that have fallen, it will take time to know the names of the different firms exposed to this debacle which has renewed a great mistrust of the crypto industry.
It all started with the dramatic collapse of sister tokens Luna and UST in May, which led to the disappearance of at least $55 billion. Since then, we learned that the hedge fund Three Arrows Capital, also known as 3AC, had invested large sums of money in Luna.
The episode revealed other interconnections that are exposing a sector dominated by debt and with very few risk management mechanisms. Indeed, Three Arrows Capital has apparently borrowed money from several crypto firms using the same Bitcoins as collateral. The more Bitcoin prices fell, the less the hedge fund could repay its creditors.
It is therefore no surprise that 3AC defaulted on a loan of $667 million granted...
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