Three Arrows Capital
BankruptFund · $3AC · born 2012 · ✝ 2022
A $10B fund that was long everything with everyone's money.
A crypto hedge fund whose leveraged, correlated bets detonated in the 2022 contagion, taking lenders down with it.
- Peak
- $10B AUM
- Cause
- Bankrupt
- Year of death
- 2022
☠️ Cause of death
Massive leverage across LUNA, GBTC and staked ETH. When LUNA collapsed, margin calls cascaded and 3AC defaulted on lenders.
📓 Lessons left behind
- —Borrowing to amplify correlated bets is a single bet.
- —Counterparty risk is contagious.
- —'Supercycle' theses are not risk management.
🌱 The idea that survived
Transparent prime brokerage
On-chain credit and segregated, overcollateralized lending reduce the opaque counterparty webs that spread 3AC's blast radius.
#leverage#contagion#hedge-fund