Genesis Loaned Three Arrows Capital $2.36 Billion

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  • Genesis has filed a $1.2 billion claim against Three Arrows Capital
  • The bankrupt hedge fund actually has debts of $2.36 billion with the brokerage firm
  • GBTC, ETHE, AVAX and NEAR are among the assets Three Arrows has defaulted on

Crypto brokerage firm Genesis Global Trading loaned defunct hedge fund Three Arrows Capital $2.36 billion in under collateralized loans according to bankruptcy filings. Financial advisory firm Teneo, which has been put in charge of the Three Arrows bankruptcy, released a 1,159 page document yesterday which contained information previously unknown to the public. Genesis has filed a $1.14 billion claim against Three Arrows, which its parent company, the Digital Currency Group, has assumed, leaving Genesis with no outstanding liabilities tied to Three Arrows Capital.

Three Arrows Defaulted with Grayscale Shares and Coins

Three Arrows Capital filed for Chapter 15 bankruptcy in the Southern District of New York on July 1, leaving a litany of claimants in its wake. One of these is now confirmed to be Genesis, which is seeking relief from Three Arrows regarding assets of $1.14 billion, as well as pledged AVAX and NEAR tokens worth a total of $91.3 million.

The document uploaded by Teneo, which since appears to have been taken down, reveals that Genesis has made demands for breached Three Arrows Capital loans totaling $2.36 billion. These loans were partly collateralised with 17.4 million shares in the Grayscale Bitcoin Trust (GBTC), almost 447,000 shares in Grayscale Ethereum Trust (ETHE), 2.7 million AVAX tokens and 13.9 million NEAR tokens. All these have been liquidated by Genesis, adding to the debt owed by Three Arrows.

Genesis issued a margin call to Three Arrows Capital seeking collateral to make up the shortfall, but when the required collateral was not forthcoming it sent a notice of default, demanding the full loan balance. This, too, has now failed to materialise, leaving Genesis facing “hundreds of millions” in losses because of its exposure to Three Arrows Capital.

More Details Revealed in Bankruptcy Filing

The same document is also said to have revealed incredible levels of spending by those in charge of Three Arrows, and other fascinating insights. These included founders Su Zhu and Kyle Davies putting down $50 million down payments for yachts despite the fact that their hedge fund was in the process of under, while Zhu has put in his own claim of $5 million against the company and Davis’ wife is pushing for a $65 million payout of her own!

It’s pretty clear by this point that the fireworks have only just started.