Cryptocurrency Hedge Fund Three Arrows Capital Defaults

By Nick Hedley

Cryptocurrency hedge fund Three Arrows Capital has defaulted on a loan worth about $673 million.

The sell-off of digital assets continues to take its toll on investors, with the price of bitcoin having fallen by around two-thirds since November 12.

Voyager Digital, a U.S. cryptocurrency trading platform, said in a statement on June 27 that it had issued a notice of default to Three Arrows Capital for failure to make the required payments on its loan of 15,250 bitcoin and $350 million USDC – a dollar-pegged “stablecoin.”“Voyager intends to pursue recovery from Three Arrows Capital and is in discussions with the company's advisors as to legal remedies available,” it said.

In the meantime, Voyager said its platform remained operational. As of June 24, it had $137 million in cash and owned crypto assets on hand. The company also has access to a $200 million cash and USDC revolving facility, and a 15,000 bitcoin revolver, from Alameda Ventures. The Three Arrows Capital default did not cause Voyager to default on its agreement with Alameda.

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

The company has engaged Moelis & Company as financial advisors.

Three Arrows Capital was established in 2012 by Su Zhu and Kyle Davies.

Elsewhere in the industry, cryptocurrency lender Celsius Network recently paused withdrawal, swap, and transfer functionalities.

“We want our community to know that our objective continues to be stabilizing our liquidity and operations,” the company said in a statement to users. “This process will take time.

“As has been a priority since our company’s inception, we maintain an open dialogue with regulators and officials. We plan to continue working with regulators and officials regarding this pause and our company’s determination to find a resolution.”