Many have been claimed as victims of the cryptocurrency crash for several weeks.
In addition to retail investors who have lost their savings, institutional investors have also been hit hard and especially the firms which have funded a large number of crypto projects.
Three Arrows Capital (3AC) has just confirmed the rumors that states it was in very serious financial difficulties after its investments in projects like Luna turned into a disaster.
According to 3AC co-founder Kyle Davies told the Wall Street Journal that the firm invested over $200 million in Luna tokens in February, an amount that is now essentially worthless ever since the coin imploded in May.
“The Terra-Luna situation caught us very much off guard,” Davies said.
TerraUSD, or UST, and its sister token, Luna, crashed after UST lost its peg to the dollar, the foundation of which qualifies as a stablecoin.
UST lost its dollar peg when millions of investors all decided to redeem their tokens at the same time.
At least $55 billion of market cap disappeared between May 9 to May 13, causing massive losses to many investors. Testimonies of financial ruin have followed on social media, as TheStreet Rob Lenihan previously reported.
3AC said it had hired legal and financial advisors to help explore its options, including asset sales and a rescue by another firm with hopes to reach a settlement with creditors, Davies said.
“We are committed to working things out and finding an equitable solution for all our constituents,” Davies told the WSJ.
Founded in 2012 by former classmates Su Zhu and Kyle Davies, 3AC has grown into one of the largest and one of the most well-known crypto hedge funds. The company has funds worth over $3 billion worth of cryptocurrencies under management as of April.
According to theBlock.co, the recent crypto market crash appears to have wiped out the hedge fund, which also owes $6M to crypto exchange BitMex.
“Crypto exchanges FTX, Deribit and BitMEX have liquidated Three Arrows Capital’s positions over the past week after the crypto hedge fund known as 3AC failed to meet margin calls”, The Block reported, citing anonymous sources.
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