Crypto hedge fund at center of crisis faces risk of default as deadline to repay $670 million nears
- Three Arrows Capital, a crypto-focused hedge fund, must meet a Monday deadline to repay more than $670 million in loans to Voyager Digital or face a default.
- Voyager said it intends to pursue recovery from 3AC and is speaking with its advisors regarding available legal remedies.
- Three Arrows Capital, or 3AC, is facing a liquidity crunch following the collapse of TerraUSD and Luna, margin calls on its loans, and a massive slump in the cryptocurrency market.
- Billions of dollars have been erased from the value of the cryptocurrency market in the past few weeks. Companies in the industry are feeling the pain. Lending and trading companies are facing a liquidity crunch and many companies have announced layoffs.
Yoo Chun Christopher Wong | S3studio | Getty Images
Three Arrows Capital, a crypto-focused hedge fund, must meet a Monday deadline to repay more than $670 million in loans or face default, in a case that could have a ripple effect across the digital asset market.
3AC, as it is also known, is one of the most prominent crypto hedge funds around and is known for its high leverage bets.
But with billions of dollars being written off from the cryptocurrency market in recent weeks, the hedge fund is facing a potential liquidity and solvency problem.
Voyager Digital, a digital asset brokerage, said last week that it had lent 3AC 15,250 bitcoins and $350 million in USDC stablecoin. At Monday's prices, the total loan equates to more than $675 million. Voyager has given Three Arrows Capital until June 24 to repay the $25 million and full loan outstanding by June 27, on Monday.