Three Arrows Capital is currently facing liquidation from crypto lending platforms. BlockFi, one of the leading decentralized finance (DeFi) lending firms, has already liquidated 3AC after failing to fulfill its margin calls.

The crypto hedge fund and venture capital firm is considering selling its remaining assets and even getting a bailout as it faces insolvency amid the ongoing recession across the cryptocurrency market.

3AC Crypto Bailout

A report by Wall Street Journal has said that 3AC is currently working with legal and financial advisors to discuss the solutions available for lenders and investors. The company is weighing several options, among them asset sales and a bailout by another firm. The company is also negotiating for more time to repay the existing creditors.

The news about 3AC facing liquidation started circulating on crypto Twitter earlier this week. The company’s co-founders remained quiet, but Zhu Su later tweeted saying that the company was “fully committed to working this out” and “communicating with relevant parties.”

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On-chain data had shown that the company was tapping into some of its held crypto assets to repay its creditors. The crypto hedge fund had sold millions of dollars worth of Lido-staked Ethereum holdings.

3AC was Exposed to Terra Luna

The company’s co-founder, Kyle Davis, disclosed to the WSJ that the company was exposed to the collapsed Terra Luna blockchain. The company participated in the Luna Foundation Guard $1 billion token sales, where it bought around $200 million worth of LUNA (now called LUNC).

A whistleblower from the Terra Community Forum recently disclosed that before LUNC collapsed to $0, 3AC had 10.9 million LUNC tokens worth around $560 million locked on the platform. These tokens are currently worth below $1000.

3AC has also been exposed to the volatility of the cryptocurrency market. The prices of Bitcoin and Ether have gone back to 2020, which has triggered massive liquidations for 3AC’s positions. After failing to meet its margin calls, 3AC has been liquidated by some of the top DeFi lending platforms, such as BlockFi.

Three Arrows Capital was launched in 2021 and has grown to become one of the largest hedge funds in the crypto space. At its peak, the company held $10 billion in assets under management. In the WSJ report, Davies said that he still believes in crypto’s future.


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