28th June 2022 – (New York) Prominent crypto hedge fund Three Arrows Capital has defaulted on a loan worth more than $670 million. Digital asset brokerage Voyager Digital issued a notice on Monday morning, stating that the fund failed to repay a loan of $350 million in the U.S. dollar-pegged stablecoin, USDC, and 15,250 bitcoin, worth about $323 million at today’s prices.
3AC’s solvency crunch comes after weeks of turmoil in the crypto market, which has erased hundreds of billions of dollars in value. Bitcoin and ether are both trading slightly lower in the last 24 hours, though well off their all-time highs. Meanwhile, the overall crypto market cap sits at about $950 billion, down from around $3 trillion at its peak in Nov. 2021.
Voyager said it intends to pursue recovery from 3AC (Three Arrows Capital). In the interim, the broker emphasised that the platform continues to operate and fulfil customer orders and withdrawals. That assurance is likely an attempt to contain fear of contagion through the wider crypto ecosystem.
“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” said Voyager CEO Stephen Ehrlich.
As of Friday, Voyager said it had approximately $137 million in U.S. dollars and owned crypto assets. The company also noted that it has access to a $200 million cash and USDC revolver, as well as a 15,000 bitcoin ($318 million) revolver from Alameda Ventures.
Last week, Alameda (FTX founder Sam Bankman-Fried’s quantitative trading firm) committed $500 million in financing to Voyager Digital, a crypto brokerage. Voyager has already pulled $75 million from that line of credit.
“The default of 3AC does not cause a default in the agreement with Alameda,” the statement said.
CNBC did not immediately receive a comment from 3AC.