Blockchain.com Reveals $270 Million Loss on Three Arrows Exposure
Cryptocurrency wallet provider Blockchain.com said on Friday it gained exposure to Three Arrows Capital (3AC) after the recently bankrupt hedge fund failed to respond to a margin call.
“Three Arrows is rapidly becoming insolvent and the default impact is approximately $270 million worth of cryptocurrency and US dollar loans from Blockchain.com,” Blockchain.com CEO Peter Smith said in a statement. letter to shareholders.
Blockchain.com is also pursuing all strategies to recoup any potential losses, he added.
The apparent insolvency of the mega crypto hedge fund has rocked the cryptocurrency industry. Many well-known crypto brokers and lenders revealed huge losses which forced some of them to file for bankruptcy.
Cryptocurrency lender and broker Genesis revealed earlier this week that it has exposure to Three Arrows Capital. However, the company’s CEO said it sold collateral and hedged its decline once the crypto hedge fund failed to meet a margin call in June. He added that the company’s loans to 3AC had a weighted average margin requirement of more than 80%, but did not disclose the amount loaned.
TSX-listed crypto broker Voyager Digital has also filed for bankruptcy, days after issuing a formal notice to 3AC to recover approximately $660 million allegedly loaned to the Singapore-based hedge fund.
Voyager said it was working with lawyers to discuss available options, including pursuing legal action against 3AC if the venture capital fund – which was suffering from a major liquidity crunch – was unable to repay its debt.
Blockchain.com Investigates Path to IPO
The news comes just weeks after Blockchain.com said it was asking investment bankers about going public as early as this year.
The company hasn’t made a final decision, however, and its initial public offering (IPO) plans could change, and the public debut could also slip to next year.
The news should come as no surprise as Blockchain.com CFO Macrina Kgil told Forbes last year that it was considering going public, but there were no immediate action plans.
Blockchain.com, led by CEO and co-founder Peter Smith, is said to have registered 73 million crypto wallets and over 31 million verified users in over 200 countries. It also claims a 28% market share of all bitcoin transactions.
Earlier this year, Blockchain.com raised an undisclosed amount in its Series D funding round at a whopping $14 billion valuation. The recent post-money valuation has more than doubled from the $5.2 billion valuation Blockchain amassed in its $300 million Series C funding round in March 2020. But, more interestingly, the Previous valuation came just a month after the company raised $120 million in a funding round that valued it at $3 billion.