More Trouble for Three Arrows Capital as Voyager Seeks $670M Loan Repayment
Singapore-based crypto hedge fund Three Arrows Capital (3AC) has received a notice of default by crypto brokerage firm Voyager Digital for failing to repay its $670 million loan. 3AC had borrowed $350 million USDC stablecoin and 15,250 bitcoins worth around $323 million from the brokerage company.
Voyager Issues Notice of Default to 3AC
Last week, Voyager told the beleaguered venture capital firm to repay $25 million in USDC on June 24 and the remaining balance on June 27 to curb its exposure. However, 3AC has not been able to repay either of the amounts, with today being the deadline. The brokerage firm has now issued a notice of default to the hedge fund.
3AC’s insolvency comes weeks after the global crypto market dropped below $1 trillion following a series of adverse events, including Terra’s collapse and news of the Federal Reserve hiking interest rates to curb inflation.
Due to the market downturn and the company’s investment in Terra, 3AC suffered massive liquidation from crypto lenders, including BlockFi.
Voyager Plans to Pursue Recovery
Voyager intends to pursue recovery from Three Arrows Capital and is currently in discussions with its advisors to determine the legal options suitable for the case.
The crypto broker is also seeking advice from Moelis & Company, a global investment bank that provides financial advisory services to corporations, governments, and sponsors.
Meanwhile, 3AC’s failure to repay its $670 million loan will not affect Voyager’s daily operations, and the brokerage promises to continue honouring customers’ orders and withdrawal requests.
“We are working diligently and expeditiously to strengthen our balance sheet and pursue options so we can continue to meet customer liquidity demands,” said Stephen Ehrlich, Voyager Chief Executive Officer.
Last week, the firm had approximately $137 million cash and owned crypto assets on hand with access to $200 million cash, a USDC revolver, and a 15,000 BTC revolver from Sam Bankman-Fried’s investment firm Alameda Ventures Ltd.
So far, Voyager has utilised $75 million worth of the credit line Alameda provided with plans to continue to use the VC’s facilities to process customers’ orders and withdrawals when needed.
The crypto broker also noted that 3AC’s default does not interfere with its partnership with Alameda.
~ By William A. Frederick ~
