A British Virgin Islands Court has ordered the liquidation of Three Arrows Capital 3 AC, plunging the hedge fund into a deeper crisis, Sky News reported.
According to the report, Teneo Restructuring was mandated to handle 3 AC restructuring.
Voyager Digital issued 3 AC with a notice of default on a loan worth around $660 million, 15,250Bitcoin, and $350 million in USDC earlier in the week.
Many believe that the ruling is a pivotal moment for the struggling criptocurrency industry, even though 3 AC has yet to comment on the decision. The financial implications of the liquidation of 3 AC creditors is not clear.
The ruling came almost two months after 3 AC got its first whiff of problems with the crash of LUNA and UST token.
According to reports, the firm allegedly acquired a significant UST position in Anchor using counterparty funds without informing investors.
Kyle Davies, co-founder and chairman of 3 AC, said the firm is committed to working things out. He said that the firm would consider options like a rescue by another firm or selling some of its assets.
It is not clear how 3 AC will proceed with a mandatory liquidation now imminent.
3 AC liquidation could have a ripple effect on the criptocurrency industry.
The liquidation of 3 AC is likely to have a ripple effect on the space, because of its plethora of creditors in the industry, including Celsius, BitMex, and BlockFi.
Its liquidation could have an impact on future regulations on the criptocurrency industry.
A proposed bill by Senators Cynthia Lummis and Kirsten Gillibrand is currently receiving recommendations from stakeholders in the space.
The president of the European Central Bank ECB Christine Lagarde has urged regulators to introduce new laws that govern cryptocurrencies activities like staking and lending.