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Three Arrows Capital Eyes Asset Sale or Bailout, Confirms Co-Founder

Following the recent drama with the crypto hedge fund, one of the co-founders – Kyle Davies – said they are exploring different options, some of which include asset sales and getting rescued by another firm. Nevertheless, both Davies and Su Zhu remain believers in the crypto industry.

Headquartered in Singapore, 3AC became one of the largest cryptocurrency-focused hedge funds in the past few years. However, the first signs of trouble emerged earlier this week when rumors started to circulate that it could face a massive liquidation in some of its positions.
The situation took a turn for the worse a few days later when FT reported that 3AC failed to meet margin calls. BlockFi was among the lenders that had to liquidate some of the hedge fund’s positions.
While initially the two founders, former classmates, remained relatively quiet, Davies opened up about the company’s dire situation in an interview with WSJ.
He admitted that 3AC had suffered losses following last month’s collapse of Terraform Labs’ two native cryptocurrencies – the algorithmic stablecoin UST and LUNA. The hedge fund, along with others, participated in a $1 billion token sale event by Luna Foundation Guard and invested $200 million in LUNA as part of the deal.

“The Terra-Luna situation caught us very much off guard,” said Davies.

The plummeting prices in the broader crypto market in the past week or so harmed the firm’s positions as well.
This has pushed 3AC into looking for desperate options, including “asset sale and a rescue by another firm,” said Davies.
Despite the ongoing crisis, the co-founder asserted that they have “always been believers in crypto, and we still are,” before adding:

“We were not the first to get hit. This has been all part of the same contagion that has affected many other firms.”