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3AC confirms near $200 million loss from Luna collapse. ‘The Terra-Luna situation caught us very much off guard’

June 17, 2022, 2:29 PM UTC

Beleaguered cryptocurrency fund Three Arrows Capital (3AC) confirmed Friday it had suffered heavy losses in the recent market downturn and said it had hired legal and financial advisors to figure a way out, according to a WSJ report.

  • “We are committed to working things out and finding an equitable solution for all our constituents,” 3AC co-founder Kyle Davies told the WSJ. The fund had over $3 billion worth of cryptocurrencies under management as of April.
  • 3AC is exploring options including asset sales and a rescue by another firm and hopes to reach a settlement with creditors, Davies said. 3AC owes at least $6 million to crypto exchange BitMEX, as per a separate report by The Block today.
  • Davies said 3AC invested over $200 million in LUNA tokens as part of a $1 billion raise by the Luna Foundation Guard in February, an amount that is now essentially worthless since the Terra ecosystem imploded in mid-May. “The Terra-Luna situation caught us very much off guard,” Davies told the WSJ.
  • LUNA lost nearly all of its value over the course of a week, while ecosystem algorithmic stablecoin terraUSD (UST) fell to a few pennies after losing its intended peg with the U.S. dollar.
  • 3AC was additionally known as one of the largest holders of Grayscale Bitcoin Trust (GBTC), an institutional bitcoin product, as well as staked ether (stETH) tokens, both of which have seen steep declines recently (Grayscale and CoinDesk are independent subsidiaries of the Digital Currency Group).
  • Davies added that 3AC was working on quantifying its losses and valuing its illiquid assets, which include many venture-capital investments in crypto startups.
  • Meanwhile, Nichol Yeo, a partner of law firm Solitaire LLP, which is advising 3AC, told the WSJ that it was keeping Singapore’s financial regulator, the Monetary Authority of Singapore, apprised of 3AC’s recent developments.

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