The cryptocurrency-focused hedge fund and venture capital firm, Three Arrows Capital is considering a sale of the remaining assets and even a bailout as they face the prospect of insolvency following the violent collapse of the digital asset markets.
The company, better known as 3AC, has hired legal and financial advisers to explore solutions for its investors and lenders, The Wall Street Journal reported Friday. Several options are on the table, including an asset sale and a rescue package by another company, co-founder Kyle Davies told the WSJ. Meanwhile, 3AC is looking to buy more time by negotiating a tentative deal with existing creditors.
Davies, who said he still believes in the future of cryptocurrencies, revealed the extent of 3AC’s involvement in a $1 billion token sale issued by Luna Foundation Guard (LFG), a non-profit organization created to defend cryptocurrency. fixation of the stablecoin of the Terra ecosystem, in February of this year. Davies said that 3AC bought approximately $200 million worth of LUNC (formerly LUNA) tokens during the sale, which also saw the participation of venture firms DeFiance Capital, Republic Capital, GSR, and Tribe Capital, among others.
Earlier this week, a Terra community forum tipster revealed that 3AC had purchased a total of 10.9 million locked LUNCs worth nearly $560 million. That position is now worth less than $1,000.
Three Arrows Capital bought 10.9M locked LUNA for $559.6m – it’s now worth $670.45.
ouch
— Crypto Maxi (@cryptoMaxi420) June 14, 2022
In addition to being exposed to the collapse of the Terra ecosystem, 3AC incurred massive liquidations across multiple positions this week after the price of Bitcoin (BTC) and Ether (ETH) plunged to their lowest levels since December 2020.
As Cointelegraph reported on Thursday, Three Arrows Capital was unable to meet margin requests from a group of lenders that included BlockFi. These companies liquidated at least some of the 3AC positions.
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