Three Arrows Capital default: Voyager issues 3AC with official notice

Voyager Digital issues default notice to 3AC

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Voyager Digital has been supported by a loan from Sam Bankman-Fried’s Alameda Ventures – Photo:Shutterstock

Cryptocurrency brokerage platform Voyager Digital announced on Monday that it has issued a default notice to Three Arrows Capital (3AC), the embattled cryptocurrency hedge fund.

Voyager has accused the hedge fund of failing to make the required payments on its loan of 15,250 Bitcoin and $350m in USDC, cumulatively worth around $670m. 

The Singapore-based 3AC was invested heavily across the crypto asset market and at one point held more than $10bn in assets under management. 

How did we get here?

Although most cryptocurrency prices have steadily declined since their November 2021 record highs, the latest crypto sell-offs can be attributed to wider macroeconomic trends – such as increasing global inflation and rising central bank interest rates. 

In addition, a reduction in liquidity has prompted a cycling out of more speculative investments, such as technology stocks and cryptocurrencies. This has been seen in the falling market capitalisation of all cryptos from $2.1trn at the start of the year to $934bn today, according to CoinMarketCap.

On top of this, 3AC was also invested heavily in Luna, the ill-fated crypto project that suffered a $40bn drop in market capitalisation within the space of a fortnight last month. 

Assisted by Bankman-Fried’s Alameda Ventures

Although doubts remain about the future of Three Arrows Capital, Voyager has been helped through its recent turmoil by a loan from Sam Bankman-Fried’s Alameda Ventures.

In its default notice announcement, Voyager revealed it had drawn down $75m of the emergency $200m cash and USDC credit line provided by Alameda. The facility also includes a 15,000 BTC revolver.

Voyager added that it has $137m of cash and crypto assets on hand and has retained the investment bank Moelis & Company as its financial adviser.

CEO Stephen Ehrlich said: “We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands.”

Voyager Digital’s stock traded 16.8% lower by 11:20 EST at CAD0.64, 95% below the level at which it started the year.

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