Troubled Crypto Giant 3AC Weighing Asset Sales, Bailout Options: WSJ

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Three Arrows Capital has reportedly hired legal and financial advisors to help it establish a plan to pay back investors and lenders. 

Zhu and Davies Mulling Bailout 

Three Arrows Capital may sell off its assets or seek a bailout from another firm to overcome its ongoing liquidity woes, according to a Friday report published in The Wall Street Journal

The crypto hedge firm’s founders Su Zhu and Kyle Davies spoke out for the first time together in an interview with the New York publication, revealing that it has hired legal and financial counsel as it attempts to navigate its biggest crisis ever due to the recent decline in the cryptocurrency market. 

“We are committed to working things out and finding an equitable solution for all our constituent,” Davies said, before revealing that the fund was looking into asset sales and a potential bailout. The firm is also hoping to buy more time with creditors as it formulates a plan. 

The news comes after speculation that Three Arrows was facing insolvency surfaced in the crypto community earlier this week. Zhu and Davies stayed quiet as the rumors spread, save for a vague tweet from Zhu that said the firm was “fully committed to working this out” and “communicating with relevant parties.” 

Though full details of the situation were unclear, speculation that the firm was margin called ran rampant on Crypto Twitter. On-chain data also revealed that the firm sold off millions of dollars worth of its Lido-staked Ethereum holdings, likely in a bid to source liquidity to repay its creditors. BlockFi and other crypto companies have since confirmed that they liquidated some of the firm’s positions, according to multiple news reports. 

Three Arrows Faces Liquidation Crisis 

Margin calls occur when traders borrow leverage against collateral to go long or short on an asset. If the collateral falls below a certain threshold, overleveraged traders can get liquidated, meaning they lose their…

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