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Bitcoin Hits a Five-month Low of $39,650, Leading to $323M Liquidation for Crypto Traders

Bitcoin prices hit a five-month low of $39,650 on Monday, briefly dipping 40K before bouncing back to the $42K level.

Over 103,839 traders were liquidated in the past 24 hours due to the slump in mainstream currency bitcoin. Liquidation value was as high as $329.63 Million, of which $118.04 Million was related to Bitcoin trading positions.

The largest single liquidation order happened on Bitmex – XBTUSD value $5.95 Million.

According to Coinglass data, for bitcoin, the liquidation amount in the bitcoin cryptocurrency market in the past 12 hours was about $90.40 million, and the liquidation amount in four hours was $2.20 million.

The U.S. Federal Reserve announced that there is a high probability that it will raise interest in March amid greater discomfort with high inflation this year, as reported by Blockchain. News on January 5.

A famous crypto analyst with 555.1K followers Michaël van de Poppe tweeted that:

“If $40.6K holds, continuation upwards to $42.6K and potentially $46K is on the tables.”

But the recent situation for cryptocurrency miners was not optimistic. For instance, Kazakhstan-based crypto miners have been witnessed an unprecedented situation as they find themselves surrounded by uncertainty due to political forces. The country’s fast-growing cryptocurrency mining industry has been affected by a nationwide internet shutdown as protests erupted in western Kazakhstan against rising fuel prices.

Ethereum also saw a dip as it dropped below $3,000 on Monday morning, touching 2928.63 after trading above $4,000 for much of December 2021.

Ether (ETH)-related trading positions liquidated $89 million.

According to CoinmarketCap, Bitcoin was down 9.01% in 7 days and was trading at $41,946.45 during the intraday.

Ethereum’s 7-day slump was even more severe, nearly doubling BTC’s overall drop. In 7 days, Ethereum plummeted 16.78%. At press time, ETH has rebounded to the 3K price level and is trading at $3,104.09

Short-Term Holders Dominate Primary Driver for Bitcoin's Liquidation amid Ukraine Crisis

Bitcoin (BTC) continues to be in the red following its slip below the psychological price of $40,000, a scenario not seen in the last two weeks.

The leading cryptocurrency was down by 6.38% in the last 24 hours to hit $36,732 during intraday trading, according to CoinMarketCap.

Analysis by IntoTheBlock shows that short-term holders have been the primary catalysts of the present leg down as they continue liquidating their BTC investments. The market insight provider explained:

“Short-term holders continue to be the main driver of BTC volatility. While long-term holders remain unfazed, the balance held by traders – addresses less than 1 month, are moving almost in tandem with the price action. Since Feb 14, they decreased their holdings by 8.7% to 1.55m BTC.”

Source: IntoTheBlock

Some of the factors that might have triggered short-term holders to be on a selling spree entail the Ukraine-Russia tension, given that a full-blown war between the two nations seems likely.

Things have gotten worse given that Russian President Vladimir Putin signed a decree recognizing two breakaway regions of eastern Ukraine as independent entities. Previously, Ukraine legalized Bitcoin because it plays an instrumental role in aiding donation efforts needed to boost its army.

On the other hand, low BTC network activity triggers the current drawdown because of slashed demand. Economist Jan Wustenfeld stated:

“While the supply of Bitcoin is becoming more illiquid, which is good, network activity remains relatively low and partially even decreases further. Considering the total on-chain transaction value of $BTC since mid-2021 it has been low.”

Source: Jan Wustenfeld

Therefore, BTC demand should be rejuvenated so that the leading cryptocurrency can be back to winning ways.

Entities Holding Less Than 100 BTC are the Best Survivors amid LUNA's Liquidation

In a bid to salvage the LUNA and UST crash, the Luna Foundation Guard (LFG) liquidated 80,081 BTC, but these coins were received with open arms by entities holding less than 10,000 Bitcoins.

Market insight provider Glassnode explained:

“During the LUNA triggered sell-off in early May, a total of 80,081 BTC were liquidated by the Luna Foundation Guard. Interestingly, the supply volume held by entities < 100 BTC has since increased by 80,724 BTC. This shows a transfer from LFG to <100 BTC holders.”

Source: Glassnode

When things started going haywire in the Terra network, the LFG decided to sell its Bitcoin reserves to try and stop the collapse of the LUNA and UST tokens earlier last month.

However, this decision came a little too late because the damage had already been done, according to Binance CEO Changpeng Zhao (CZ).

CZ had previously commented:

“The Terra team was slow in using their reserves to restore the peg. The entire incident may have been avoided if they had used their reserves when the de-peg was at 5%. After the value of the coins had already crashed by 99% (or $80 billion), they tried to use $3 billion to do the rescue. Of course, this didn’t work.”

Therefore, Glassnode statistics show that the Bitcoin reserves exchanged hands from the LFG to entities with less than 100 BTC.

Does the accumulation phase back?

The accumulation phase in the BTC seems to be back based on various indicators. Ki Young Ju, CryptoQuant CEO, pointed out:

“The last Bitcoin accumulation phase was in mid-2020, lasting for 6 months. As of May 2022,, it’s pretty obvious that BTC is in an accumulation phase for me. Institutions that drove the 2021 bull-run also bought in this $25-30K range.”

Market insight provider On-Chain College echoed similar sentiments and stated:

“Bitcoin has entered the heavy accumulation zone (white), which shows us that larger entities (or a large % of the network) are accumulating.”

Source: Glassnode

With accumulation being a bullish sign as more coins are bought, it remains to be seen how Bitcoin plays out.

Trade Finance Platform We.Trade on the Brink of Liquidation, Report says

We.trade, a trade finance platform, established as a joint venture among multinational firms, including 12 banks is on the brink of liquidation, The Independent.ie reports.

The Irish startup has notably sent a notice of liquidation to its employees and it is calling for a creditors meeting next week where it may appoint a liquidator from one of the Big Four auditing giants, PwC.

The move to liquidate the startup stems from its growing loss records with the Independent reporting that the startup lost as much as $8.6 million (8 million Euros) in the 2020 financial year. Founded in 2017, We.Trade has garnered interest from the likes of IBM which joined the firm back in 2020 as it was expanding its blockchain strategy at the time.

There are as many as 12 banks that are part of the We.Trade joint venture, including HSBC, became the first banking institution to finance a trade using the Hyperledger Fabric. The inaugural interests from We.Trade stirred the startup to secure as much as 5.5 million Euros back in 2021, and the failure to secure additional funding has led to the complications stirring a liquidation at this time.

The We.Trade disintegration will not be the first of its kind in the blockchain world as Meta Platform Inc’s Diem Project was also unable to see the light of day due to excessive regulatory pressures with respect to its stablecoin creation plans. Earlier this year, the Diem project, which started out as Libra but later rebranded, announced its asset sale as it made a move to close shop and sell off its intellectual properties.

Silvergate Bank acquired the IP as Meta Platforms also sought avenues to pay off investors who had injected resources into the project from inception to that point.

Image source: We.Trade

British Virgin Island Court Orders the Liquidation of Three Arrows Capital

Earlier this week, a court from the British Virgin Islands ordered the liquidation of embattled crypto hedge fund Three Arrows Capital (3AC), as the firm proved beyond doubt that it cannot fulfil its debt obligations.

As reported by Sky News, Teneo, a British Virgin Islands-based firm has been tapped to handle the liquidations. Sources close to the liquidations say Teneo is in the earliest stages of the entire process and is trying to determine what assets 3AC has.

The sources who pleaded anonymity as the matters have not yet been made public said over the next couple of days, Teneo will set up a website with instructions on how creditors can file claims for a refund. There is no idea of how long the refund process will last or whether every creditor will be paid in full.

Prior to the public knowledge of the liquidation, Three Arrows Capital was issued a default notification by Voyager Digital for $350 million in the US dollar-pegged stablecoin, USDC, and 15,250 Bitcoin, worth about $306 million based on the price of Bitcoin pegged at $20,066.55 as at the time of writing according to data from CoinMarketCap.

While the liquidation of Three Arrows Capital has lent its own distress to the broader digital currency ecosystem, a handful of other crypto-focused platforms also record a very worrisome liquidity crisis. With BlockFi almost escaping insolvency with a recent $250 million capital injection from FTX Derivatives Exchange, Celsius lawyers are advising the firm to file for Chapter 11 bankruptcy.

This series of events is a reverberation from the collapse of Luna Classic (LUNC) and the Terraform Labs-backed algorithmic stablecoin, USTC. 3AC was reported to have deep exposure to these two tokens, and their collapse might have contributed to the speedy downfall of the hedge fund.

Three Arrow's Su Zhu Puts Singapore Luxury Home for Sale

Su Zhu, the co-founder and Chief Executive Officer of embattled Three Arrows Capital (3AC) has put his Singapore mansion for sale.

According to a report by Bloomberg, the mansion, categorized as a Good-Class Bungalow, one of the most luxurious homes for high networth individuals in Singapore was listed for $35 million, equivalent to the amount it was acquired for.

The listing of the house comes as the liquidation of Three Arrows Capital is underway as ordered by a court in the British Virgin Islands. While there is no confirmation that the proposed sale of the good-class bungalow has any connection to the distressed company, chances are that the sum could be deployed to the firm whose finances are now being strained going to the ongoing crypto market onslaught.

According to the Bloomberg report, Su Zhu and his wife, Tao Yaqiong Evelyn have two of these good-class bungalows. While the first, located at Balmoral Road was purchased under a Trust last year, the second, located at Dalvey road was purchased under Tao’s name.

The distress that led Su Zhu to put up his mansion for sale is an encompassing one as 3AC which ranks as one of the biggest crypto hedge funds with over $10 billion in Assets Under Management (AUM) as of May was unable to pay its creditors.

As reported earlier by Blockchain.News, Voyager Capital issued a notice of default to the embattled company last month for a loan worth about $650 million. Other notable platforms including FTX, and BlockFi have also liquidated the hedge fund founded alongside Kyle Davies.

It is yet unclear how 3AC’s creditors will be paid, but sources close to the liquidation process pointed out that Teneo Restructuring, based in the British Virgin Islands is responsible for the liquidation, and the firm is in the stage of valuing the company’s assets. A website will be announced in a short while for creditors to make their claims, the sources say.

Three Arrows Capital Files for Chapter 15 Bankruptcy in the US

The embattled cryptocurrency hedge fund, Three Arrows Capital (3AC) has filed for Chapter 15 bankruptcy in the United States of America as it looks to preserve its assets in the country.

According to the filing lodged with the U.S. Bankruptcy Court for the Southern District of New York (Manhattan), creditors will not be able to seize the firm’s assets in the US with this move.

A court in the British Virgin Islands ordered the liquidation of Three Arrows Capital last week as the company was unable to meet its obligation to creditors such as BlockFi, and Voyager Capital.

The woes of Three Arrows Capital were ignited by the collapse of LUNA-UST which the company has a significant amount of exposure.

The entire event of the two tokens fueled a market onslaught that many projects are yet to recover from today. The ongoing liquidation of 3AC is being handled by Teneo Restructuring, and without legal protection such as the Chapter 15 Bankruptcy that 3AC is filing, the firm might enlist the company’s assets around the world as this is the process it started its functions with according to sources close to the matter.

The bankruptcy case is tagged Three Arrows Capital Ltd and Russell Crumpler, 22-10920, and the company is being represented by the law firm Latham & Watkins.

Three Arrows Capital was one of the first and most celebrated crypto hedge funds that were founded by Credit Suisse traders, Su Zhu and Kyle Davies. At its peak this year, the firm had about $10 billion in Assets Under Management (AUM) in March according to data from Nansen. In the wake of its challenges, Voyager Digital has issued a notice of default to the company, claiming 3AC has not been able to repay a loan worth $650 million.

It is unclear if 3AC and its founders will be subjected to any legal reprimand from authorities as to the Monetary Authority of Singapore (MAS) accused the firm of sharing false information while it was operating in the country.

Su Zhu Amongst Creditors Files $5m Claim against His Own Firm: Sources

Su Zhu, the co-founder and CEO of bankrupt Three Arrows Capital (3AC), is reportedly amongst the creditors that filed claims against the embattled crypto hedge fund.

This news was shared by a Twitter user named ‘Soldman Gachs’ who also claimed he was one of the creditors of Three Arrows Capital.

“I’ve just seen the list of creditors to #3AC and noticed that @zhusu has filed a claim for $5 million. While being on the run, he has somehow found the time to diligently and ruthlessly fill out forms to pursue a claim against his own Fund,” he said in a tweet.

While the news that Su Zhu filed a claim against his own company may sound bizarre, Soldman Gachs also revealed that ThreeAC Limited, the investment manager of 3AC, also filed a $25 million claim against Three Arrows Capital. The creditor also shared the list of other creditors of the company, citing the likes of Digital Currency Group (DCG), Algorand, CoinList, and the MoonBeamNetwork amongst others.

Teneo Restructuring published the list of the creditors, which is made public for the first time since it was appointed by a court in the British Virgin Islands (BVI) to handle 3AC’s liquidation process. These creditors were reportedly expected to have a meeting on Monday, July 18.

The total value of all claims against Three Arrows Capital came in at $2.8 million, and per Soldman Gachs, some of these creditors filed for just $1 with the right.

It is highly unlikely that 3AC has enough collateral and assets to meet up with all of these claims, a harsh reality that might make some creditors lose their funds. The liquidation process is a cycle in the current crypto ecosystem, and one of 3AC’s creditors, Celsius Network, has also filed for bankruptcy in the US recently.

Su Zhu and Kyle Davies Finally Speaks About the Collapse of 3AC

During an interview with Bloomberg, Su Zhu, and Kyle Davies, the co-founders of Three Arrows Capital (3AC), the troubled hedge fund broke silence on the happenings that they have experienced in the past few weeks.

This was after released court papers claimed that the duo were nowhere to be found and are refusing to cooperate with the liquidation process. No response was gotten from the founders for about five weeks.

Not long after the court’s claim, Su Zhu resurfaced with a tweet displaying an email that his legal team had sent to the liquidators. The email signed by Christopher Anand Daniel who is the Managing Partner of Advocatus Law LLP lashed out at the liquidators suggesting that they were baiting the duo founders. The liquidators were faulting Zhu and Davies for lack of cooperation, and according to Christopher, that was not the case.

Based on Zhu’s response, their once bubbly hedge fund downturned due to their clumsy market speculations which led to soliciting large margin call on loans.

He attested to the fact that those loans should not have been taken in the first place. Both Zhu and Davies described the fall of the hedge fund as a regrettable one per the Bloomberg report. They rebuffed the claim that they had withdrawn huge funds from 3AC before the fall.

3AC’s Collapse Leads to Relocation to Dubai

Meanwhile, many crypto firms had tried to help 3AC and its counterpart who all faced liquidation and bankruptcy.

These firms who acted as creditors to the insolvent firms ended up in debt, Blockchain.com was one of the top creditors of 3AC. Recently, America-based cryptocurrency exchange Coinbase, acknowledged it had not been financially exposed to these bankrupt crypto firms.

Several investors’ loan claims on the hedge fund round up to about $2.8 billion. According to a legal document that was released on Monday, 3AC still owes its creditors and investors up to $1 billion. Coming from Zhu, the hedge fund plans to move its operations to the United Arab Emirates (Dubai). He added that Dubai had to be surveyed before the business finally moves down there.

“Given that we had planned to move the business to Dubai, we have to go there soon to assess whether we move there as originally planned or if the future holds something different for us,”

Su Zhu Worried About Jail Term Over Liquidators Class Action Settlement – Report

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Su Zhu, a co-founder of Three Arrows Capital (3AC), a Singapore-based cryptocurrency hedge fund firm, delivered an affidavit in person in Bangkok, Thailand, on August 19, as reported by Bloomberg on Friday 26th August.

In the affidavit, Zhu accused the firm’s liquidators that they used misleading and inaccurate information in their case associated with Three Arrows and its assets in the High Court of Singapore.

In June, a court in the British Virgin Islands appointed consultancy firm Teneo to liquidate Three Arrows’ assets.

Last month, Three Arrows creditors got an emergency hearing in court where the fund’s liquidators accused the two Three Arrows Capital founders (Su Zhu and Kyle Davies) of failing to cooperate in the liquidation process.

On Monday this week, the Singapore High Court approved requests by advisory firm Teneo to begin the liquidation order in the country. In the court, the liquidators said Zhu and Davies have provided “rather selective and piecemeal disclosures” about the fund’s assets.

In the affidavit, Zhu hit back and accused the liquidators of presenting “inaccurate and misleading” information about the operations, relationships, and timelines associated with Three Arrows Capital and its related entities in their petitions to the Singapore court.

In the affidavit, Zhu identified himself as a director of Three Arrows Capital Pte Ltd. He further said the entity first became a registered fund management firm in Singapore in August 2013 and was eventually licensed on July 31, 2021.

Zhu also described two feeder funds: Three Arrows Fund Ltd registered in the British Virgin Islands, and Three Arrows Fund LP registered in the US state of Delaware. Zhu stated that these entities fed into a master fund (Three Arrows Capital Pte Ltd) named in the affidavit as “the Company.”

The specifics of these representations matter to Zhu as he said the fund’s Singapore entity, Three Arrows Capital Pte Ltd, may not be able to fully comply with the liquidators’ broad demands for information.

In the affidavit, Zhu expressed his fears of “potentially draconian consequences” if Teneo is allowed to exercise its powers to liquidate assets from Three Arrows Capital Pte Ltd.

He also claimed that he and other representatives associated with Three Arrows Capital Pte Ltd could face fines or jail.

Why Did the Firm Collapse?

Three Arrows Capital has been lined up for liquidation several weeks after it was accused of defaulting on multimillion-dollar loans to the crypto firms such as Genesis Trading, Voyager Digital, Blockchain.com, among others.

The problem with the crypto hedge fund firm first started when the market crashed in May. The firm had used borrowed funds to bet big on a number of troubling cryptocurrency projects, including LUNA Terra stablecoin, which crashed to zero when it lost its peg in May, as well as, Axie Infinity, a “play to earn” game that lost almost $700m (£577) to a hack from North Korea last year.

Last month, on July 4th, Three Arrows Capital filed for Chapter 15 bankruptcy in a federal bankruptcy court in the Southern District of New York in hopes to protect its U.S. assets after a court in the British Virgin Islands ordered the company into liquidation on June 30th.

After Three Arrows collapsed during the market crash, Zhu and Davies went silent and they were widely thought to be on the run. In the past, they were accused of avoiding questions from creditors and liquidators.