<\/p>\n
The collapse of Three Arrow Capital and the counterparties wrapped in the crypto hedge fund\u2019s troubles have drawn questions about the soundness of the heady digital asset investment space. For the industry\u2019s survivors, watching their rivals fall to pieces overnight has been an alarming experience.<\/p>\n
To understand where the industry might be going after the market turmoil, we spoke with John Ge, chief executive officer at Matrixport, a Singapore-based digital asset manager with over $10 billion in assets under management and custody.<\/p>\n
Ge was formerly the head of investment and financing as well as a founding partner at Bitmain, the world\u2019s biggest maker of Bitcoin mining machines. Together with Bitmain\u2019s co-founder and former CEO Jihan Wu, Ge co-founded Matrixport in 2018.<\/span><\/p>\n Three Arrow Capital, known as 3AC in the crypto community, was one of the world\u2019s largest crypto hedge funds before its fall from grace. Its success was predicated on a risky strategy: it borrowed aggressively from crypto lenders and in turn invested that money in other crypto projects.<\/p>\n When cryptocurrency prices began to plummet earlier this year, the firm, as well as other similar outfits that bet on rising crypto prices, failed to repay their creditors and plunged into liquidation. The crypto market is down by $1.8 trillion since its peak in November, led by the slide in Bitcoin and Ethereum prices.<\/p>\n The recent market crash is \u201cinevitable\u201d, Ge says in an interview with . \u201cThe core issue is that we saw players whose business model is like a black box. They borrow money from investors without giving transparency over how the money will be used.\u201d<\/p>\n The other problem is that these crypto managers are acting both as the player and referee, Ge contends. \u201cMany of them are providing both asset management and proprietary trading. An asset manager should not be doing proprietary trading, and if it does, it needs to follow stringent leverage requirements.\u201d<\/p>\n \u201cEven the most conservative investment strategy has risks and may result in losses, but the principle is to be transparent with your customers, not fraudulent, deceptive, or misleading,\u201d the founder says.<\/p>\n Matrixport, which serves individuals as well as over 500 institutions across Asia, Europe, and North America, was exposed to 3AC and has lodged a claim alongside other creditors. But Ge assures that the firm\u2019s exposure is \u201crelatively small\u201d when compared to the exposure other industry players faced and is considered \u201cminor\u201d when compared relative to Matrixport\u2019s equity.<\/p>\n As to how to restore investor confidence in the crypto sphere, Ge believes regulators are on the right track to bring more oversight over consumer-facing crypto products and protection for retail investors, as is the case in Singapore.<\/p>\n But it\u2019s \u201cunrealistic\u201d to have regulators design risk control models for institution-focused asset managers. \u201cThe pace of regulations tends to fall behind that of industry development.\u201d<\/p>\n Ge thinks investors have \u201clost a certain level of confidence\u201d in the crypto market and the industry will take time to recover. On the other hand, he thinks competition has waned for survivors like Matrixport because \u201cmany of the other players are gone.\u201d<\/p>\n Matrixport told Bloomberg last year that it planned to go public in three to five years and Ge said that plan \u201chasn\u2019t changed.\u201d It\u2019s too early to say which market the company is floating its shares but the U.S is a \u201clikely\u201d option given investors there are more \u201cwelcoming of crypto innovation.\u201d<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" The collapse of Three Arrow Capital and the counterparties wrapped in the crypto hedge fund\u2019s troubles have drawn questions about the soundness of the heady digital asset investment space. For the industry\u2019s survivors, watching their rivals fall to pieces overnight has been an alarming experience. To understand where the industry might be going after the […]<\/p>\n","protected":false},"author":1,"featured_media":1170503,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[],"class_list":["post-1170501","post","type-post","status-publish","format-standard","has-post-thumbnail","category-celebrity-gossip"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1170501","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1170501"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1170501\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1170501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1170501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1170501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}