Genesis Reportedly Lent $2.36 Billion to Three Arrow Capital

Genesis Global Trading – a crypto prime brokerage firm – reportedly credited the now insolvent Three Arrows Capital (3AC) with $2.36 billion in under collateralized loans.

• As reported by The Block, details on 3AC’s loans were gleaned from a 1,159-page document uploaded by the advisory firm Teneo on Monday. However, the link to that filing appears to be down, as of writing.
• The filing reportedly shows that Genesis tried to recover some of its losses using arbitration proceedings against 3AC last month.
• However, the arbitration proceeding was paused after Genesis recruited Teneo to assist with 3AC’s liquidation in late June.
• The document also showed some details regarding 3AC’s collateral. It included 17,443,644 shares of Grayscale’s Bitcoin Trust, 446,928 shares of Grayscale’s Ethereum Trust, 2,739,043.83 AVAX, and 13,583,265, NEAR.
• As of June 15th, 3AC was short $462 million on its collateral requirements.
• Genesis CEO Michael Moro confirmed in June that the firm had mitigated its losses with “a large counterparty who failed to meet a margin call” However, neither the name of the counterparty nor the exact figure for its losses were given.
• Later, Moro confirmed that the counterparty was 3AC and that its loans to the fund had a weighted average margin requirement of 80%.
• “Once they were unable to meet the margin call requirements, we immediately sold collateral and hedged our downside,” he said at the time.
• Furthermore, Genesis’s parent company Digital Currency Group (DCG) assumed some of Genesis’s liabilities to help it continue to operate.
• As of Monday, Genesis’s parent company Digital Currency Group filed a $1.2 billion liquidation request against 3AC.
• 3AC filed for bankruptcy at the start of July.