Crypto-focused hedge fund Three Arrows Capital is reportedly exploring options to withstand the recent losses including the possibility of asset sales or a bailout.
Three Arrows Capital has hired legal and financial advisors to formulate a solution for investors and lenders in the midst a major market sell-off. Options being explored include asset sales and a rescue by another firm, according to Three Arrows co-founder Kyle Davies in an interview with «Wall Street Journal».
«We have always been believers in crypto and we still are,» Davies said. «We are committed to working things out and finding an equitable solution for all our constituents.»
Contagion Risk
Earlier this year, non-profit organization Luna Foundation Guard raised $1 billion in a token sale for a bitcoin-denominated reserve designed to maintain TerraUSD’s $1 per stablecoin value. According to Davies, Three Arrows invested about $200 million in the Luna deal before the stablecoin and sister token Luna effectively collapsed last month.
While Three Arrows was able to withstand the Luna losses, the subsequent ripple effect to the broader crypto market created more problems for the firm. It is currently still quantifying losses and valuing its illiquid assets which include venture capital investments in dozens of crypto-related companies.
«The Terra-Luna situation caught us very much off guard,» Davies said. «We were not the first to get hit […] This has been all part of the same contagion that has affected many other firms.»
