The breakdown of the Terra ecosystem appears to have been the catalyst for Three Arrows, commonly known as 3AC, to collapse, which sent shockwaves across the cryptocurrency market. Investors assert that they are still owed $2.8 billion by the now-defunct firm.
The magnitude of the hedge fund's debt after its implosion was made public in a 1,157-page court document, with individual claims totaling more than $1 billion. According to the article, the fund's demise was caused by leveraged bets made in the anticipation of a positive rebound in the cryptocurrency market.
It also contrasted the collapse of 3AC to that of Celsius Network, a cryptocurrency lending company that stopped accepting withdrawals and sought bankruptcy protection after running out of cash to honour customer redemptions.