Three Arrows Capital defaults on Voyager loan

Voyager Digital had not received the $670 million loan it had made to Three Arrows Capital by today’s deadline. Voyager has said that it will pursue recovery of the loan, but with Three Arrows Capital facing potential insolvency, Voyager could also come under threat.

Before it became commonly known that the crypto hedge fund Three Arrows Capital was in difficulties, Voyager, a digital asset brokerage, had already lent the distressed fund 15,250 bitcoins, together with $350 million in USDC stablecoins.

The deadlines to pay both amounts were June 24 for $25 million in USDC, and June 27 for the entirety of both bitcoin and USDC loans. Both deadlines have passed with neither amount having been paid.

On today’s news of the non-repayment, Voyager’s shares plunged more than 20% to reach a price of $0.45. The shares of the company have continued to bleed ever since the crypto market top in November of last year, going from nearly $21 down to $0.45, a 98% fall.

Voyager has let it be known that it will be pursuing 3AC for recovery of its funds, and to that end it is talking to advisors on the subject of the “legal remedies available”.

Sam Bankman-Fried’s Alameda Research has provided credit lines to Voyager in order to help with its current liquidity demands. Voyager has said that it has already accessed $75 million, and that it would potentially ask for more so that it can honour customer withdrawals etc.

According to Bloomberg, Voyager’s chief executive Stephen Ehrlich stated:

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

It might appear that the whole crypto sector is waiting for the 3AC, Celsius, Voyager, Blockfi situations to play out. Some of them have links with various of the others, and some of them were negatively affected by the Luna/UST collapse.

It’s looking likely that 3AC may go down, and if it does then the contagion could spread to other crypto companies besides the ones already mentioned. All will be holding their breath for the coming days and weeks.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.