Three Arrows Capital (3AC) is weighing asset sales and ‘financial assistance’ from other firms, and is trying to negotiate payment delays with creditors. The Wall Street Journal reports, citing co-founder Kyle Davies.
Against a backdrop of a crypto-market sell-off, rumors of 3AC insolvency surfaced. The firm had actively used high-risk DeFi instruments and made a number of ill-fated investments, including the cryptocurrency LUNA, which collapsed in value.
Davies told WSJ that 3AC had hired legal and financial advisers to work out a solution for its investors and creditors. He said the structure has not ceased operations.
“We have always believed in cryptocurrencies and we still do. We intend to work through this and find a fair solution for all of our clients,” he said.
The co-founder revealed that as part of the February token sale, the structure invested in LUNA about $200 million. After the Terra ecosystem’s collapse, this amount was largely written off.
“The Terra/LUNA situation caught us off guard,” he added.
Davies stressed that 3AC managed to weather the LUNA crash, but the subsequent cascade of adverse events, which dragged down the crypto market, worsened the situation.
He said 3AC is still trying to tally its losses and assess the value of illiquid assets, including venture investments in private companies and startups.
The managing partner of the law firm Solitaire LLP (which advises 3AC), Nikol Yeoh, told WSJ that the hedge fund’s investors are institutional and wealthy private individuals. He added that Three Arrows Capital is informing the Monetary Authority of Singapore about the developments.
Earlier reports indicated liquidations of 3AC’s positions by counterparties. Platforms BitMEX, FTX and Deribit, as well as the crypto lender BlockFi.
On June 16, 8 Blocks Capital accused Three Arrows Capital of using client funds to cover margin calls.
Follow ForkLog’s Bitcoin news in our Telegram — cryptocurrency news, prices and analysis.