The collapse of Three Arrow Capital and the counterparties wrapped in the crypto hedge fund’s troubles have drawn questions about the soundness of the heady digital asset investment space. For the industry’s survivors, watching their rivals fall to pieces overnight has been an alarming experience.
Tech Crunch 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.
Ge was formerly the head of investment and financing as well as a founding partner at Bitmain, the world’s biggest maker of Bitcoin mining machines. Together with Bitmain’s co-founder and former CEO Jihan Wu, Ge co-founded Matrixport in 2018.
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.
But it’s “unrealistic” to have regulators design risk control models for institution-focused asset managers. “The pace of regulations tends to fall behind that of industry development.”
Ge thinks investors have “lost a certain level of confidence” 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 “many of the other players are gone.”
Three Arrow Capital, known as 3AC in the crypto community, was one of the world’s 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.