Digital Currency Group’s market maker and lending firm Genesis Trading has confirmed that it had investment exposure in the now-liquidated Three Arrows Capital (3AC).
The collapse and succeeding liquidation order of the beleaguered company sent effects through the cryptocurrency space last week amid an ongoing recession across crypto markets. A major talking point was the stake other projecting companies had in the now-defunct cryptocurrency hedge fund and the ongoing outcome.
Genesis Trading is amongst prominent lending firms that had exposure to 3AC, which has now been confirmed by CEO Michael Moro. The company’s chief said the firm had managed to moderate losses after 3AC had failed to meet a margin call on capital borrowed from Genesis.
While Moro stopped short of declaring how much it had lent to 3AC, he disclosed the terms of the firm’s loan to the hedge fund and the subsequent chain of events after the insolvent failed to meet its repayment obligations:
“The loans to this counterparty had a weighted average margin requirement of over 80%. Once they were unable to meet the margin call requirements, we immediately sold collateral and hedged our downside.”
Genesis Trading’s parent company Digital Currency Group has assumed some of the liability payable by 3AC in order to ensure Genesis has satisfactory capital to continue its operations. The firm will continue to explore options to try and recover losses in the wake of 3AC’s collapse.
Reports suggest that Genesis is facing fatalities in the hundreds of millions of dollars while the company is yet to disclose the details of its exposure to 3AC.
Voyager Digital was another fatality of 3AC’s collapse as the cryptocurrency exchange was enforced to delay trading, deposits, and withdrawals at the start of July. The hedge fund was unsuccessful to repay the BTC and USDC loan to the American exchange.
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