Crypto-focused hedge fund and venture capital firm Three Arrows Capital is eyeing the sale of remaining assets and even a bailout as it grapples with the prospect of insolvency following a violent market meltdown digital assets.
The company, which also goes by the name 3AC, has hired legal and financial advisors to explore solutions for its investors and lenders, The Wall Street Journal reported Friday. Several options are on the table, including the sale of assets and a bailout by another company, co-founder Kyle Davies told the Journal. In the meantime, 3AC is looking to buy more time by negotiating an agreement in principle with existing creditors.
Davies, who said he still believes in the future of crypto, revealed the extent of 3AC’s involvement in a billion-dollar token sale issued by Luna Foundation Guard (LFG), an organization non-profit created to defend the stable peg of the Terra ecosystem, in February this year. Davies said 3AC bought around $200 million in LUNC (formerly LUNA) tokens during the sale, which also had participation from venture capital firms DeFiance Capital, Republic Capital, GSR and Tribe Capital, among others.
Earlier this week, a whistleblower from the Terra Community Forum revealed that 3AC purchased a total of 10.9 million locked LUNCs worth nearly $560 million. This post is now worth less than $1,000.
Three Arrows Capital bought 10.9 million locked LUNAs for $559.6 million – it’s now worth $670.45.
— Crypto Maxi (@cryptoMaxi420) June 14, 2022
In addition to being exposed to the collapse of the Terra ecosystem, 3AC suffered mass liquidations across multiple positions this week after the price of Bitcoin (BTC) and Ether (ETH) plunged to all-time lows. level since December 2020.
Related: Su Zhu’s Cryptic Statement As Rumors Swirl About 3AC’s Liquidations And Insolvency
As UKTN reported on Thursday, Three Arrows Capital did not respond to margin calls from a group of lenders that included BlockFi. These companies liquidated at least some of 3AC’s positions.