Cryptocurrency firm Three Arrows Capital liquidated in the Caribbean

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Cryptocurrency firm Three Arrows Capital liquidated in the Caribbean

The court ordered Three Arrows Capital to be liquidated in the British Virgin Islands after a court ordered it to come into effect in the winter of criptocurrency, according to Sky News.

The firm was founded in 2012 by former Deutsche Bank trader Su Zhu and investor Kyle Davies and has taken bullish bets on the topic of crypto, but is now facing a crisis due to a wider selloff. Three Arrow Capital and its ability to meet its target goals were impacted by the recent collapse of the algorithmic stable coin TerraUSD, as billions of dollars were wiped out of the market.

The research firm FSInsight published a report last week that Three Arrows Capital resembled an old-fashioned Madoff-style Ponzi scheme. Sean Farrell, head of digital asset strategy at FSInsight said that they recklessly borrowed from just about every institutional lender in the business. The report detailed how Voyager Digital, Babel Finance and BlockFi were financially vulnerable because of their deals with the company.

Three Arrows Capital was hit with a default notice on a loan over $665 million by Voyager Digital on Monday. The company had given 15,250Bitcoin and $350 million in USDC to Three Arrows Capital, which it said it plans to recover from the insolvent company.

Voyager CEO Stephen Ehrlich told The Washington Post that we are working diligently and expeditiously to strengthen our balance sheet and pursue options so that we can meet customer liquidity demands.

The vulnerability of cryptocurrencies firms to contagion risks has been made by the fact that the winter has sparked a lot of relief. One company's inability to pay sharply impacts another, given the interconnected nature of criptocurrencies borrowing and investments.

The liquidation process is currently overseen by Teneo, which is currently identifying the value of Three Arrow Capital's assets. The company plans to launch a website in the coming days to help creditors pursue their claims.

On Twitter, Zhu admitted that his predictions aboutCryptocurrencies were wrong. He had endorsed the view that cryptocurrencies would soar with mainstream adoption, but last month he said he was regrettably wrong, but still believed in the underlying value: Cryptocurrencies will still thrive and change the world every day. As the winter progresses,Bitcoin, the world's most valuable coin, is trading around $19,000, a far cry from its all-time high last November of $69,000.

The global value of cryptocurrencies has dropped from $3 trillion to just over $1 trillion today.