After Facing Hundreds of Millions of Dollars in Liquidations, Crypto Hedge Fund Three Arrows Capital's Future Looks Uncertain (theblock.co) 58
The Block reports: The future of crypto hedge fund Three Arrows Capital hangs in the balance as the firm faces potential insolvency after being liquidated by its lenders. According to well-placed sources, the investment firm -- which counts the likes of options exchange Deribit and financial services firm BlockFi among its venture bets -- is in the process of figuring out how to repay lenders and other counter-parties after it was liquidated by top tier lending firms in the space. Sources declined to share the names of those firms on the record for fear of reprisal, but three people said the liquidation totaled at least $400 million. They added that the firm has maintained limited contact with its counter-parties since being liquidated. The liquidation event is just one of several setbacks by the firm, which has backed projects like Avalanche, Polkadot, and Ether which are all down 57%, 38.8%, and 47% over the last 30 days respectively. The fund sustained significant losses during the collapse of the Terra ecosystem last month, after investing heavily in its native token LUNA. The firm, which reportedly managed approximately $10 billion at market peak by some estimates, is led by former classmates Su Zhu and Kyle Davies.
Re: Will they get a bailout? TARP 2.0 perhaps? (Score:2)
Re:Will they get a bailout? TARP 2.0 perhaps? (Score:5, Insightful)
They won't -
1) Not of enough of the political animals know what Crypto is. They don't understand it so they don't care about it not really..
2) Its a Trillion dollar industry across the entire world its a drop in the bucket. They are not going to waste political capital or treasury capital defending crypto bros when its looking like they might have to come up solutions for bailing out working class in the face of inflation and uncertainty about rolling government debt in the face of rising bond rates.
3) Politically speaking, not many votes have exposure to it in their 401Ks. That is what matters, that is what determines how wealthy people 'feel' and that is what governs the future retirement crisis the USA faces.
4) For everyone not "lucky" enough to get 401k matches as a retirement vehicle they think in terms of employment and hourly wages, and ultimately what that means for their SS comp. Crypto does not employ many of them.
5) The ones who do understand crypto see it as a dollar competitor, because it is, even if its a really shitty one that ought to go to zero because everything about it fucking stupid. In the middle of an inflation crisis - why would ANYONE in power think its a good idea prop up an industry that causes people to sell dollars to buy another "fiat asset"? Nope you'd want them selling crypto and buying dollars - strengthening the dollar by increasing demand for dollars and letting the other fiat vanish into the ether from which it came (see what did there).
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Re:Will they get a bailout? TARP 2.0 perhaps? (Score:4, Insightful)
The financial sector gamblers who were bailed out via TARP were unfortunate, in that it would have been nice for them to face the consequences; but they'd legitimately done the legwork of putting together enough complex links to the actual economy that letting them burn to death inside their casino without setting everything else on fire would have been deeply nontrivial.
'Crypto', though? There are some day-trading idiots who might be worth a flicker of humanitarian consideration; but the rest of the alleged 'value' in the space is a mixture of VCs and criminals whose losses are somewhere between irrelevant and desirable.
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haha overrated because I'm concerned about normal people
You shitlords with modpoints aren't even trying to hide the fact that you are absolute scum any more.
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So what? People lose their asses on get rich quick schemes all the time.
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"A not inconsiderable number of normal people invested in crypto because they thought it would continue to blow up. I"
From the macro perspective, the number IS inconsiderable. There's a baseline of people who will fall for that through lack of understanding through to simple desperation. Think Amway and their ilk. This group isn't new, and it won't disrupt the economy.
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This group isn't new, and it won't disrupt the economy.
The amounts are larger, and the numbers of people are probably larger because it was perceived and advertised as an investment vehicle. But yes, of course it will "disrupt the economy", a disruption of any size is still a disruption.
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Well, I'll have to disagree. If you declare that any hiccup is a disruption, you nullify the term. That's just avoidance. A disruption would show up somewhere. It would move some needle other than the needle of those immediately involved in the failure. If you can explain to me how somebody who has no direct connection to crypto finds themselves impacted by this circumstance, I'll concede the point. But the line would have to be pretty specifically drawn.
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"Have fun staying poor!"?
The people screaming that for the past few years... you want to bail those people out?
GFY
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You want another TRILLION dollars printed out of thin air to bail out [checks notes] fucking crypto bros?
Your suggestion is another reason the 2008 bailouts were such a catastrophe. Google "moral hazard", I don't feel like typing more paragraphs.
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The financial sector gamblers who were bailed out via TARP were unfortunate, in that it would have been nice for them to face the consequences;
It's hardly "gambling" when one is forced to take on shitty NINJA (No Income, No Job or Assets) loans, thanks to the Community Reinvestment Act. I'm amazed that con lasted as long as it did.
'Crypto', though? There are some day-trading idiots who might be worth a flicker of humanitarian consideration; but the rest of the alleged 'value' in the space is a mixture of VCs and criminals whose losses are somewhere between irrelevant and desirable.
It's just another variation of the Greater Fool Theory. Suckers who bought in at the high are left holding the bag.
Re:Will they get a bailout? TARP 2.0 perhaps? (Score:5, Insightful)
It is true that community reinvestment required a certain number of loans that otherwise might not have been made. However, those loans all performed exceptionally well and much better than predicted. Of course those loans were made to borrowers who actually met with loan officers and had a conversation and the loan officer extended the community reinvestment loans to people they thought were most capable of repaying.
Lenders noticed that carefully-selected CRA borrowers were profitable. Rather than think through the *why* they assigned low risk ratings to the entire high-risk demographic. And well, duh, that's what you get.
I can't believe that not only is the fiction that CRA was a contributing factor still being repeated but that a post doing so was actually modded up.
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So you are saying the CRA isn't responsible for the crisis but than you draw a pretty direct path form CRA related requirements to the crisis...
I follow what you are saying, about the CRA loans themselves not being directly responsible and having a lower default rate than the larger pool of NIJA loans.
However re summarized
1) Government forces to lenders to consider loans to people who would otherwise have been dismissed as to big a credit risk based on their usual metrics.
2) The loans succeed because (as mo
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So you are saying the CRA isn't responsible for the crisis but than you draw a pretty direct path form CRA related requirements to the crisis...
I follow what you are saying, about the CRA loans themselves not being directly responsible and having a lower default rate than the larger pool of NIJA loans.
However re summarized
1) Government forces to lenders to consider loans to people who would otherwise have been dismissed as to big a credit risk based on their usual metrics.
2) The loans succeed because (as most of us would agree) if you actually meet personally with borrows and take the time fully understand their situation chances are you can identify some good credit candidates in a pool of people who otherwise have contra indicators.
3) Some (admittedly foolish/malicious/careless) data analysis is done looking at success rates and the usual indicators indicators. The results get skewed by the by the loans from (2) and bad conclusions about risks of the general pool are made.
4) disaster strikes.
So yes CRA was responsible, it was an unintended and perhaps avoidable consequence but that is sorta the point, when government puts its thumbs we don't know what all will happen. Had the CRA never existed those people would have been excluded from the credit market most likely (even if unfairly), and they would not have poisoned the risk data as a result.
This is.... unconvincing.
Banks got into subprime mortgages because some people with half a statistics degree realized that if you have a single mortgage with P=0.2 probability of default you have a 20% chance getting almost nothing but the foreclosure. But if you have thousands of mortgages close to P=0.2 of default then you're almost certainly going to get a 80% success rate.... Unless of course a systemic event happens that changes the P=0.2 to something like P=0.7 and your guarantee of success turns into
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That wouldn't have done mort
Re: Will they get a bailout? TARP 2.0 perhaps? (Score:2)
You are forgetting the second half of the situation. Insurance. Banks so they can lend more put all of theirbhigh risk portfollios and a bunch of good ones to balance it out and insured that through another bank.
That bank then took 2-5 of other banks high risk insurance mortgage portfollios and insured that. .
Repeat a few more times and a couple of banks suddenly held a massive pile of mortgages insurance that that was very very high risk.
Why did banks suddenly need a massive ount of capital and xould pa
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The gaslighting is infuriating. The CRA that forced banks to give loans to people who had no means of paying them back is totally not responsible for the banks giving loans to people who had no means of paying them back!
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I think you're misunderstanding things. Banks weren't so much "forced" to give out CRA loans, rather they actually loved doing it, if only for the money the same bank made selling mortgage bonds of those loans. Banks selling tranches as AAA when they contained a lot of profitable (for them) B and BB loans was the ultimate problem.
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Those loans should've never been made in the first place and the CRA is largely responsible for that. There's also the MASSIVE fraud at every step of the financing process that went totally unpunished (just like crypto these past few years). And now people here are suggesting another bailout for criminals??? They all belong in prison.
It kills me how the same people whining about being priced out of the housing market defend the very policies, bailouts and subsequent re-inflation of all the bubbles that pri
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The CRA was a good program that made housing available to a small number of people. Had banks made the required CRA loans but not additional loans to similar demographics, there would not have been a financial crisis. The CRA was intentionally limited in scope as to minimize the risk of losses.
The banks were required to take a small amount of
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> So yes CRA was responsible, it was an unintended and perhaps avoidable consequence but that is sorta the point, when government puts its thumbs we don't know what all will happen. Had the CRA never existed those people would have been excluded from the credit market most likely (even if unfairly), and they would not have poisoned the risk data as a result.
No, there were many lenders who were doing crazy bad underwriting for short term fee generation, and these lenders had no obligation legally under CR
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No.
Crypto is nowhere near the market share that it would have any serious impact if ALL of it disappeared now.
It needs to be far larger to even start having a serious impact. The fact "It's too big to fail" now is a myth floated by people invested in crypto who want to believe they're more relevant than they actually are.
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You can be too big to fail on direct size alone if you are absolutely enormous(or sufficiently large in something that a nation state considers a strategic necessity, like aerospace capabilities or high performance semiconductors); but if you can't meet that standard you really need complex interconnections with lots of other things to generate effective size.
Over in crypto-land there are a
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Exactly. It's only a fairly small amount of actual people with their heads and fists so far up each other's asses that they think their tiny group is representative of the whole.
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Cryptocurrency is not Too Big To Fail. Its mindshare is disproportionate to its actual market weight, and that is a good reason to let it sink or swim on its own merits. Whether one accepts the analogies with Charles Ponzi and tulip bulbs or not, there is a lot of unbacked speculation and outright fraud in the cryptocurrency field right now, and we should not spend government money to bolster either speculation or fraud.
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They're all so high on each other's farts they think the whole world is knee-deep in crypto nonsense.
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Crypto 'only has gone up' only if you squint and be selective. It has been subject to wild swings in both directions. If you try to say 'but if I squint *hard* enough, the overall shape is up...ish' keep in mind that is less than 10 years, which is a very short time to consider 'always'. For reference, Bernie Madoff's ponzi scheme was able to sustain itself longer than cryptocurrencies entire history.
The only thing that made it go 'up' was a self-fulfilling prophecy and enough bigger fools to keep it going
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Is this supposed to be a joke? In what way is crypto 'so important' to the economy? If crypto collapsed overnight some people will have made money, some will have lost money, and the overall effect on the economy is so small it probably can't even be measured. In fact, it may even be good for the economy as maybe people will invest in things that actually provide a benefit (like jobs) to the economy.
'The US has spent more to have company buy back stock prices'. Huh? Is that supposed to be english? Wha
Re: Will they get a bailout? TARP 2.0 perhaps? (Score:2)
No for one key reason. Crypto is the opposite of state control, and the state will not bail out anything it cannot control
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Crypto's importance due to "mind share" is not just easily replaced; it's automatically replaced by something else. The role of large banks in enabling money to move around the economy was irreplaceable. Even if *you* don't do business with banks like JPMorgan directly, your bank depends upon those banks.
Is it *fair* that big banks get a bailout and crypto exchanges don't? No it is not. A bailout is not an instrument of *fairness*, it is an instrument of *necessity*.
TARP was a bitter pill for the public,
What a trag... (Score:5, Insightful)
Hahahahahahahaha
Your money is just numbers.
Now get a job and make something useful.
Die! Die! Die! (Score:3)
Hahahahahahahahaha
In other news, any instance of the "crypto" scam that collapses is good news. I just regret that probably nobody will go to prison for this.
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If you imprisoned people for false promises and unrealistic exuberance, you'd have to build all new infrastructure just to house the marketers.
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True. Still sounds like a good idea to me. Would likely be a net win for everybody (well, except them of course).
Old-fashioned financial problems with new technolo (Score:4)
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Good. (Score:3)
Hedge funds are parasitic entities on both the people of society and businesses.
Crypto + Hedge Funds (Score:4, Funny)
What could possibly go wrong...
Banks and currency are regulated for a reason (Score:5, Insightful)
When you bypass that system, things like this happen.
Oh no... (Score:1)
schadenfreude (Score:3)
I've come to an uncomfortable realization about myself. Each time I see another folded crypto organization, I... enjoy it. Much like I enjoy hearing about hurricanes, train wrecks, flooding, heat waves, and big nuclear explosions from the past... this decade has been highly... entertaining?
But on the smaller scale, I give regularly of both my time and money to charities that I believe in. I routinely help others in need, mostly friends and family (we're not an affluent bunch, collectively). I'm a decent leader and mentor.
I think that I'm a relatively good person in practice, but an increasingly shittier one in the abstract.
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firm faces insolvency after being liquidated (Score:2)