Luna Crash: Crypto Hedge Fund Three Arrows Seeks a Savior

The fall of cryptocurrencies causes colossal losses to investors and threatens to wipe out certain projects and firms.

The cryptocurrency crash for several weeks continues to claim victims. 

In addition to retail investors who have lost their savings, institutional investors are also in disarray and more particularly the firms which have funded a large number of crypto projects.

This is the case of Three Arrows Capital (3AC), which has just confirmed the rumors according to which it was having very serious financial difficulties after its investments in projects like Luna turned into disaster.

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 after the coin imploded in May.

“The Terra-Luna situation caught us very much off guard,” Davies told the paper.

TerraUSD, or UST, and its sister token, Luna, crashed after UST lost its peg to the dollar, the foundation of it qualifying as a stablecoin, which is a cryptocurrency tied to a more stable asset like the U.S. dollar or gold.

UST lost its dollar peg when millions of investors all wanted to redeem their tokens at the same time.