Three Arrows Capital Defaults on Voyager Digital

Key Takeaways

Three Arrows Capital was issued a notice of default by Voyager today.
The hedge fund failed to repay its 15,250 BTC and $350 million loan to the crypto exchange; Voyager will now be pursuing legal means to recuperate its funds.
Voyager continues to be fully operational thanks to a loan from Alameda Research.

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Three Arrows Capital has failed to pay back $665 million in loans from Voyager Digital, which today issued the firm’s first notice of default. Voyager clients will not be impacted by the default, as Alameda has provided credit for the crypto exchange to meet “customer liquidity demands.”

3AC’s First Default

Crypto exchange Voyager has issued a notice of default to Three Arrows Capital on its $665 million debt.

According to the company’s press release, Three Arrows Capital failed to make the payments required by Voyager by its requested deadline. Voyager is exposed to the notorious crypto hedge fund to the sum of 15,250 BTC (more than $315 million at the time of writing) and $350 million in USDC.

Co-founded by Su Zhu and Kyle Davies in 2013, Three Arrows Capital was one of the world’s most successful crypto hedge funds. The multi-billion dollar firm became famous within the crypto community for advancing the “supercycle” theory, arguing that Bitcoin would never again suffer the same brutal drawdowns as in its early days.

The hedge fund was reportedly wiped out two weeks ago by the market collapse. Multiple crypto companies and protocols were affected by the firm’s liquidity issues, including Voyager. However, Three Arrows Capital had not been served any notice of default until today.

Voyager had previously requested the firm to repay $25 million of its outstanding loan by June 24 and the rest of its balance by June 27. It will now “pursue recovery” from Three Arrows Capital by legal means.

The press release indicated that the platform continues to be fully operational; client withdrawals have not been impacted. In order to secure “customer liquidity demands” Voyager secured a 15,000 BTC and $200 million loan from crypto trading firm Alameda Ventures last week; the company also has claims to have $137 million and crypto assets at hand. 

Nevertheless, Voyager’s stock (VOYG) was negatively impacted by the news. The company’s common shares are currently trading at $0.50, down from $0.60 at the day’s start.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.

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