Three Arrows Capital

Three Arrows Capital (3AC), a Singapore-based crypto hedge fund, collapsed due to poor risk management, recklessness in dealing with business partners and a significant portion of greed.

The start of 3AC’s troubles can be traced back to the collapse of LUNA and its algorithmic stablecoin UST, in which 3AC held a significant position worth roughly $560 million at its peak and about $600 after the price crashed in a matter of days to almost zero.

3AC built the above position using high leverage via counterparty funds, which it put in Anchor Protocol without the knowledge of the counterparties. This led to a chain reaction of events ultimately leading to its collapse, resulting in 27 companies being affected, totaling more than $3 billion in damage.