Genesis Trading CEO Michael Moro said the firm liquidated the position of a ‘large counterparty’. He did not name the company, but users speculated that it referred to hedge fund Three Arrows Capital (3AC).
3/Genesis can confirm that we carefully and thoughtfully mitigated our losses with a large counterparty who failed to meet a margin call to us earlier this week. No client funds are impacted. We sold and/or hedged all of the liquid collateral on hand to minimize any downside.
— Michael Moro (@michaelmoro) June 17, 2022
“Genesis can confirm that we carefully and thoughtfully mitigated our losses with a large counterparty who failed to meet margin requirements. No client funds were affected,” Moro stressed.
Twitter users speculated that the Genesis Trading head was referring to Three Arrows Capital.
I was trying to guess who this counterparty was then I remember that I had 3 ACs needing repair recently, despite of their “genius” manufacturer
— CyberAlien.eth (@cyberalien_eth) June 17, 2022
One commenter compared Moro’s thread to BlockFi chief Zac Prince’s statement.
Almost the exact same statement from @BlockFiZac
Are these guys using the same business playbook?? 🤣Good luck to both of you, this is when we learn who are the real deal.
— tour (@tour_de_flaneur) June 17, 2022
Earlier, Prince said that the crypto-lending platform made its best business decision regarding a major client who could not meet margin loan obligations backed by excess collateral. According to Financial Times, some of 3AC’s positions were liquidated.
According to Moro, Genesis Trading plans to “actively pursue recovery of any potential residual losses by all available means”.
4/We will actively pursue recovery on any potential residual loss through all means available, however our potential loss is finite and can be netted against our own balance sheet as an organization. We have shed the risk and moved on.
— Michael Moro (@michaelmoro) June 17, 2022
In February 2022, Three Arrows Capital led the $1 billion LUNA token sale by LFG. In May the Terra ecosystem collapsed, and its native cryptocurrency had nearly collapsed in value.
In June, amid a rout in the crypto markets, rumors emerged about the insolvency of the hedge fund which actively used protocols like Aave.
On June 16, trading firm 8 Blocks Capital accused Three Arrows Capital of using client funds to cover margin calls.
According to some reports, crypto platforms BitMEX, FTX and Deribit liquidated 3AC’s positions due to the latter’s failure to meet margin requirements.
On June 17, co-founder Kyle Davies said that Three Arrows Capital had hired legal and financial advisers to work out a plan for its investors and creditors. He said the group had not ceased its operations.
For details on how Celsius, 3AC and stETH are connected, and on the potential market impact of their bankruptcy, read ForkLog’s exclusive:
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