By CK Zheng, Co-founder and CIO, ZX Squared Capital
Cryptocurrency hedge fund Three Arrows Capital (3AC) filed for liquidation in New York last month – the latest and biggest casualty in a crypto winter that’s claimed a majority of Terra USD (CRYPTO: UST)’s value and forced Celsius Network to pause withdrawals. As investors, these events make us reconsider systemic risk. The key underlying issue in 3AC’s downfall however is overleverage, which brings back memories of the fall of Long-Term Capital Management (LCTM) in the 1990s – as well as some lessons that are relevant for this moment.
