Contagion Spreads: BlockchainCom Facing $270M Loss on Loans to Three Arrows Capital

#Ripple #XRP

Peter Smith – CEO of crypto exchange platform BlockchainCom – said the fallout from VC firm Three Arrows Capital (3AC) could cause his company to lose $270,000,000.

• In a letter to shareholders dated June 24th, Smith said that 3AC had defaulted on $270,000,000 worth of crypto and U.S. Dollar loans from BlockchainCom.
• The CEO claims the firm had reliably borrowed and repaid $700 million in loans from the exchange over the past four years.
• However, 3AC was liquidated on multiple loans last month due to poor risk management. It filed for bankruptcy last week.
• The fallout led to liquidity issues at multiple other crypto lending firms that were counterparties, such as Finblox and Voyager.
• “[BlockchainCom] remains liquid, solvent and our customers will not be impacted,” clarified Smith in the letter.
• Earlier this month, CryptoPotato reported that both BlockchainCom and Deribit were seeking 3AC’s liquidation from a British Virgin Islands Court. The court ordered the firm into liquidation in June.

• “We believe Three Arrows Capital defrauded the crypto industry and intend to hold them accountable to the fullest extent of the law,” read a statement from BlockchainCom

• 3AC’s trouble also arguably stemmed from financial contagion dating back to Terra’s collapse in May – a protocol in which it was deeply invested.
• As of now, BlockchainCom is yet to announce any withdrawal freezes or restrictions on customers’ funds, the way CoinFLEX and Celsius have.

OhNoRipple via https://www.ohnocrypto.com/ @Andrew Throuvalas, @Khareem Sudlow