Blockchain.com Faces $270M Loss Due to 3AC Exposure
A July 8 report claims that Blockchain.com suffered a loss of $270 million due to exposure to Three Arrows Capital (3AC), a crypto hedge fund. Peter Smith, CEO of Blockchain.com, shared the news in a letter to shareholders. Blockchain.com’s CEO Peter Smith stressed that the company “remains solvent, liquid and our customers won’t be impacted .”
Another crypto company has reported losses due to being exposed Three Arrows Capital Ltd. (3AC), a troubled crypto hedge fund which just filed Chapter 15 bankruptcy. Blockchain.com is the latest company to suffer from 3AC’s fallout, according to a Coindesk report. This was after the newsdesk reviewed the letter that Peter Smith had sent to shareholders.
Smith stated that the company lost $270 million in the 3AC incident, but stressed that Blockchain.com was financially sound. Smith explained in a letter to shareholders that Three Arrows is quickly becoming insolvent. The default impact is $270 million in cryptocurrency and U.S. dollars loans from Blockchain.com.
Ian Allison, Coindesk’s CEO, explained that 3AC borrowed $700 million and then returned it to Blockchain.com over four years. Allison also spoke to a source familiar with Blockchain.com’s financials, and the source confirmed that the company’s finances were sound.
According to the person quoted, “We don’t get the feeling there is any stress on the organisation.” This news comes after Blockchain.com secured up $100 million in liquidity through Truefi’s single borrower pool and the company’s sponsorship agreement with Dallas Cowboys. In December 2021, Blockchain.com also purchased Sesocio, a Latin American crypto investment platform.
Crypto Exchange Blockchain.com CEO Reveals Potential $270M Loss Due to 3AC Exposure
Blockchain.com CEO Peter Smith Accuses 3AC of ‘Defrauding the Crypto Industry’
3AC was established by Su Zhu, and Kyle Davies on June 17, 2012. The Wall Street Journal interviewed Davies on June 17, 2022. Davies stated that 3AC had purchased $200 million worth of luna classic (LUNC), before its value plummeted.
The LUNC purchase now has a value of less than $1K. Some reports claim that 3AC attempted to recoup its losses by using excessive leverage or’revenge trade’. Bloomberg reports that Blockchain.com’s Peter Smith claimed that his company was cooperating with investigators regarding 3AC’s issues.
Smith stated that Blockchain.com intends to “to hold [3AC] responsible to the fullest extent law” and that Deribit and Blockchain.com both pushed for 3AC to be liquidated.
Blockchain.com is one of many companies that suffered losses from 3AC exposure. Others include Voyager Digital and Blockfi as well as Babel Finance and Vauld. Blockfi secured a line of credit from FTX, while Voyager, Vauld and Babel all paused withdraws, and Voyager ended up for bankruptcy.