After incurring significant losses due to a widespread market selloff in digital assets, Davies stated that Three Arrows Capital has employed legal and financial consultants to help find a solution for its investors and lenders.
According to Davies, Three Arrows Capital is looking into possibilities, including asset sales and being rescued by another firm. To extend its time to develop a strategy, the fund seeks to negotiate an agreement with its creditors. While looking for a solution, the company is still operational.
Earlier this year, Luna Foundation Guard held a $1 billion token sale, in which Three Arrows Capital was one of several significant investors. The money was used to create a stablecoin reserve in Bitcoin to preserve TerraUSD’s value at $1 per coin. Three Arrows had invested around $200 million in Luna as part of that arrangement. When Terra collapsed, 3AC’s investment was up in smoke.
“The Terra-Luna situation caught us very much off guard.”
May’s losses in the price of Bitcoin were made worse by the Luna Foundation’s selling of bitcoin to support TerraUSD. According to Davies, Three Arrows Capital was able to sustain the LUNA losses. Still, the ensuing chain of events that led the values of Bitcoin, Ethereum, and other cryptocurrencies to crash in recent weeks brought forth new issues.
Speaking about the firm’s beliefs in crypto, Davies stated,
“We have always been believers in crypto and we still are. We are committed to working things out and finding an equitable solution for all our constituent.”
Davies said that Three Arrows Capital is still attempting to determine the extent of its losses and the value of its illiquid assets, which include venture capital investments in several unlisted startups and private cryptocurrency-related businesses.