Crypto hedge fund Three Arrows Capital has fallen into liquidation, becoming the latest high-profile victim of the credit crisis sweeping through the digital asset market.

Teneo was appointed this week as “joint liquidators” of Three Arrows through a court order in the British Virgin Islands, according to a person familiar with the matter.

The move to liquidate Three Arrows comes as tremors in the crypto market in recent weeks have intensified as global investors ditch speculative assets on concerns over slowing global growth and decisions by major central banks to sharply tighten monetary policy.

Three Arrows, which is based in Singapore and registered in the British Virgin Islands, is among the best-known investors in the crypto sector. The group did not immediately respond to a request for comment on the appointment of liquidators, which was first reported by Sky News.

Three Arrows earlier this month failed to meet demands from lenders to put up extra funds after its digital currency bets turned sour. Run by Su Zhu and his co-founder Kyle Davies, it was known for its levered bets on rising crypto prices. Zhu had pitched a “supercycle” thesis, in which increasing mainstream adoption meant prices would continue to climb without falling back into a near-term bear market.

Bitcoin, the most actively traded cryptocurrency, is down more than 50 per cent this year. Meanwhile, the market value of the top 500 crypto tokens has slumped to less than $1tn from a high of $3.2tn in November.

Earlier this week Canada’s Voyager Digital said it had issued a default notice to Three Arrows for its failure to pay back a loan amounting to around $660mn, made up of $350mn of USDC, a stablecoin, and 15,000 in bitcoin.

US-based crypto lender BlockFi and Genesis, two of the biggest crypto financial services groups, also reduced their exposure to Three Arrows by taking collateral the fund had put down to back its borrowing.

Teneo’s liquidation team will be headed by Russell Crumpler and Christopher Farmer, the person familiar with the matter added. The identity of the party that prompted the court order has not been made public.

Adding to the market jitters, crypto exchange CoinFlex froze customer withdrawals last week in response to crashing market prices. To restart its business CoinFlex wants to raise money by issuing a new crypto with an annualised yield of 20 per cent.

Other major firms have also come under intense pressure as a severe chill has descended on once-popular platforms that allowed investors to earn sky-high returns through lending out their coins. Lending firms Celsius and Babel Finance were forced to halt withdrawals earlier this month in response to the tough conditions in the crypto market.

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