3AC Owes $2.36 Billion To Crypto Lender Genesis

According to a news report by crypto news site The Block, It has been found that Genesis Asia Pacific Ltd, lent a sum of $2.36 billion to troubled and now bankrupt venture capital Three Arrows Capital (3AC).

A freshly released document by Teneo, an advisory firm hired to oversee 3AC’s liquidation, has shown the exact amount of debt 3AC owes crypto lender Genesis. As per reports from the block, the debt is said to be undercollaterized.

Genesis, which is a division of the crypto conglomerate Digital Currency Group (DCG), is reported to have commenced an arbitration process through the American Arbitration Association (AAA) to recover some of the funds just before 3AC filed for chapter 15 Bankruptcy

A source from DCG however told The Block that the debt has little effect on both DCG and Genesis and there is no longer exposure to 3AC adding that their balance sheets are strong as ever.

Genesis also claimed in its letter to AAA last month that 3AC had breached two lending agreements that were signed in January 2019 and January 2020.

Genesis CEO Michael Moro on the 3AC situation

In a series of tweets on July 6th just after 3AC filed for bankruptcy, Genesis’ Chief Executive Officer, Michael Moro updated the public on Genesis’ exposure to 3AC. He started by confirming that 3AC is indeed the large counterparty who failed to meet a margin call.

As to steps Genesis took or plans to take to control the situation, the CEO tweeted,

The loans to this counterparty had a weighted average margin requirement of over 80%. Once they were unable to meet the margin call requirements, we immediately sold collateral and hedged our downside.

He added that they’ve since begun to work with their parent company DCG “to find the optimal strategy to further isolate the risk”, and further indicated that the conglomerate will provide capital to ensure that their business continues operation.