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.