SAD_
Autopsy report

Three Arrows Capital

3AC | Fund
InsolvencyDied Jun 2022

A loud, well-known crypto hedge fund borrowed heavily to concentrate bets on LUNA and GBTC. When LUNA collapsed, the leverage unwound, lenders took losses, and a court ordered the fund liquidated.

Missed warning signs
  1. 1-1y
  2. 2-6mo
  3. 3-2mo
  4. XDeath

Spacing is ordinal, not to scale. Numbers match the list below.

  1. 1

    Borrowed from many lenders at once, so no single lender saw its total leverage.

    Visible 1 year before death | Opaque books and affiliates

    FortuneCNBC

  2. 2

    Founders reportedly bought a luxury yacht near the top of the cycle.

    Visible 6 months before death | Conspicuous spending at the top

    Fortune

  3. 3

    Publicly known, heavy concentration in LUNA, a bet that could only lose one way.

    Visible 2 months before death | Concentrated exposure

    FortuneBloomberg

The lesson

Leverage does not amplify conviction. It amplifies the unwind.

Sources
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Editorial summary of public reporting. Allegations are labeled as allegations. Not financial or legal advice.

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