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Three Arrows Capital has defaulted on a loan, says Voyager Digital

The crypto hedge fund was caught by the luna crash.

Crypto winter

Voyager Digital said crypto hedge fund Three Arrows Capital defaulted on a loan.

Illustration: Christopher T. Fong/Protocol

Crypto hedge fund Three Arrows Capital has defaulted on a loan of cryptocurrencies worth $666 million from Voyager Digital, the broker said Monday.

Voyager Digital said it has issued a notice of default to the hedge fund for failing to make payments on a loan of 15,250 bitcoin and $350 million USDC. Voyager ”intends to pursue recovery from [Three Arrows] and is in discussions with the company's advisors as to legal remedies available,” the company said in a statement.

"We are working diligently and expeditiously to strengthen our balance sheet and pursue options so we can continue to meet customer liquidity demands," Voyager CEO Stephen Ehrlich said in a statement.

Voyager stressed that it "continues to operate and fulfill customer orders and withdrawals," noting that it had roughly $137 million in cash and "owned crypto assets on hand."

The company had also obtained a revolving line of credit from Alameda Ventures, an affiliate of FTX CEO Sam Bankman-Fried's Alameda Research. That line provides access to 15,000 bitcoin and $200 million in cash and USDC.

News of Three Arrow's default underscored the gravity of the cryptocurrency market crash. The crypto market has shed $2 trillion in the past seven months as the price of bitcoin has plunged from about $67,000 in November to roughly $20,000 this week. Three Arrows had bet heavily on luna, the token tied to Terraform Labs' UST stablecoin, in February, helping lead a $1 billion purchase of the cryptocurrency in February. That bet dragged Three Arrows and other firms down as UST and luna collapsed.

Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

cryptocurrencythree arrows capitalvoyager digitalcrypto crash
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