Three Arrows Capital, the struggling $10 billion crypto hedge fund, has defaulted on a nearly $700 million loan from Canadian crypto exchange Voyager Digital, it announced on Monday.
In an extraordinary statement last week, Voyager said Three Arrows owed it 15,250 Bitcoin and $350 million in the USDC stablecoin and gave the hedge fund until June 27 to repay the loan. Bitcoin was trading at $20,783 as of noon New York time on Monday.
A legal action
Voyager issued a notice of default on Monday and said it intended to pursue collection and was discussing its options with attorneys. Three Arrows did not immediately respond to a request for comment on Monday.
The decision is sure to further shake up the crypto lending industry. The fall of Terra in May and the suspension of withdrawals at crypto bank Celsius this month have shaken confidence in the burgeoning cryptocurrency-denominated lending industry, especially those that are not backed by collateral.
Another Three Arrows partner is also threatening the struggling hedge fund with legal action. Last week, Kyber Network said approximately $8 million of its cash had been entrusted to Three Arrows, but it had not responded to repeated requests for information.
As of June 24, Voyager had $137 million in cash and crypto assets, he said.
“We are working diligently and quickly to strengthen our balance sheet and seek options so that we can continue to meet customer demands for liquidity,” Voyager CEO Stephen Ehrlich said in a prepared statement.
The stock market’s financial woes landed him in the arms of trading firm Alameda Capital, which recently granted Voyager a line of credit worth nearly $500 million. Voyager has since borrowed $75 million, he said on Monday.
“The platform continues to operate and fulfill customer orders and withdrawals,” Voyager said in a press release, “and may continue to use Alameda facilities to facilitate customer orders and withdrawals. , as required”.