Voyager LLC declares default by Three Arrows Capital

The cryptocurrency broker announced that its subsidiary has issued a notice of default to hedge fund Three Arrows Capital for failure to repay a loan it made.

Three Arrows Capital is in default according to Voyager LLC

A few days ago the hedge fund Three Arrows Capital (3AC) lost millions of dollars due to both bad investments and the bear market.

Indeed, a black period for the cryptocurrency market continues, and as a result, liquidity problems are beginning to emerge for some cryptocurrency-related companies.

After the collapse of the Terra ecosystem and its stablecoin a month and a half ago, as well as the announcement that the Celsius platform decided to stop withdrawals due to market difficulties, now it is the turn of the hedge fund Three Arrows Capital to have serious problems repaying a loan it received.

JUST IN: Voyager has issued a notice of default to 3AC for failure to repay $670 million in loans

— Blockworks (@Blockworks_) June 27, 2022

A press release issued by the brokerage firm reads:

“Voyager Digital LLC, has issued a notice of default to Three Arrows Capital (“3AC”) for failure to make the required payments on its previously disclosed loan of 15,250 BTC and $350 million USDC. Voyager intends to pursue recovery from 3AC and is in discussions with the Company’s advisors as to legal remedies available”.

Details of the loan and failure to pay

The company said it had requested repayment of 25 million USDC by June 24. Receiving no response from the hedge fund, it made the decision to request that the full amount be repaid by 27 June. By the due date, having received no payment, the default request was triggered, Voyager explained.

According to data that emerged from Voyager’s parent company, the subsidiary would have sufficient liquidity to meet the non-repayment (about $137 million in cash). In recent months, Voyager has had access to $75 million from a line of credit provided by Alameda. 3AC’s default does not result in any revision of this agreement with Alameda, Voyager sources say.

Stephen Ehrlich, CEO of Voyager, said:

“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands”.

More about the Three Arrows Capital fund

Three Arrows Capital, a hedge fund founded in 2012 by Su Zhu and Kyle Davies, had already shown signs of great distress in the past few weeks, due to unfavorable market conditions that had resulted in multimillion-dollar losses (more than $40 million has been reported since the beginning of the year). 

This call for default could severely affect the fund’s ability to borrow further from the market and could be the prelude to outright bankruptcy, despite assurances, which have come from the fund’s top corporate management.