Embattled cryptocurrency hedge fund Three Arrows Capital (3AC) is working to provide a bailout, according to a report by the Wall Street Journal.
The cryptocurrency firm was hit hard by Terra’s collapse in early May. According to co-founder Kyle Davis, who finally spoke about the hedge fund’s financial woes, 3AC’s $200 million position in the Luna token evaporated after prices for its management token and sister stablecoin TerraUSD plunged to near zero.
While 3AC parried the initial blow from the Tether contamination, it was later hit again by falling cryptocurrency prices. Earlier this week, the Bitcoin price dropped as low as $20,000, its lowest level since December 2020.
Davis says the hedge fund is currently in the process of valuing some of its illiquid assets. Davies also stated that they still believe in cryptocurrencies.
Davies co-founded 3AC with classmate Zhu Su in 2012. The two eventually became one of the world’s largest cryptocurrency holders and 3AC managed billions of dollars. Zhu came to prominence for his now infamous “super-cycle” thesis. Last February, he predicted during a podcast that the price of Bitcoin could go up to $2.5 million. At the end of May, Zhu finally admitted that the thesis was “unfortunately” wrong. Following the 3AC rumors, Zhu stated that they were in talks with “interested parties”. The hedge fund has so far remained silent about its problems and has declined requests for comment.
On Thursday, the Financial Times reported that 3AC was unable to meet margin calls from lenders. Popular cryptocurrency lender BlockFi has confirmed that the hedge fund has liquidated some of its positions.
