Crypto-asset broker Voyager Digital has issued a notice of default to cryptocurrency-focused hedge fund Three Arrows Capital Ltd (3AC) after the financially troubled hedge fund firm failed to make the required payments on its loan worth more than $670 million.
Voyager issued a notice on Monday morning, saying that 3AC has defaulted on a loan worth 350 million in USDC stablecoin and $323 million in 15,250 Bitcoins at today’s prices.
Voyager disclosed it intends to pursue asset recovery from Three Arrows Capital and has been discussing legal remedies available to recover the amount from the hedge fund.
Meanwhile, Voyager has clarified that the brokerage platform continues to operate and fulfil customer orders and withdrawals.
Voyager CEO Stephen Ehrlich, further commented: “We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands.”
On Thursday last week, Voyager reduced its daily withdrawal limit from $25,000 to $10,000 after it revealed its exposure to struggling hedge fund 3AC.
The crypto broker was hit by a financial crisis triggered by the current market downturn. As of Friday, Voyager stated it had approximately $137 million in U.S. dollars and owned crypto assets.
As part of efforts to revive its financial health situation, Voyager said on Monday, yesterday’s statement, that it had accessed US$75 million of a revolving line of credit previously made available by VC fund Alameda Ventures, FTX founder Sam Bankman-Fried’s quantitative trading firm.
On Friday last week, Alameda Ventures provided Voyager with a line of credit worth $500 million (a US$200 million cash and USDC revolver as well as 15,000 Bitcoins worth $318 million revolvers). The funds are intended to help Voyager meet customer liquidity needs during this challenging financial period.
By borrowing funds from Alameda, Voyager will use its finances to meet customer liquidity demands and strengthen operations.
The news follows the move by crypto lending platform BlockFi to secure a $250 million loan from FTX. Last Friday, BlockFi secured the loan to further bolster its balance sheet and strengthen its platform after the crypto broker faced liquidity crisis fears, as the crypto industry faces a meltdown. Following the loan, FTX is reportedly in talks to acquire a stake in BlockFi.
Voyager has become one of the latest crypto firms hit by the recent market downturn. Besides BlockFi, lending platforms Celsius Network and Finblox recently suspended withdrawals to mitigate risks following fears of market contagion amid Three Arrows’ troubles.
Hurt by the current difficult crypto market conditions, Three Arrows Capital is exploring options including a sale of assets and a bailout by another company.
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