Key takeaways:
- Three Arrows Capital (3AC) has defaulted on a $625 million loan issued by Voyager Digital
- The 3AC has had its positions liquidated by several crypto firms, suggesting that the fund could be insolvent
- Alameda Ventures has been granted Voyager access to more than $500 million in extra capital
Three Arrows Capital fails to make payments on loan of 15,250 BTC and $350M USDC
Three Arrows Capital (3AC), a major cryptocurrency hedge fund and venture capital investor, has been hit particularly hard by the recent crypto downturn. The firm was heavily invested in Terra before the ecosystem’s monumental collapse earlier this year. In addition, the fund’s positions on a number of digital trading platforms – including FTX, Derebit, BlockFi, Genesis, and BitMEX – were recently closed and collateral liquidated.
Now, 3AC has been served a notice of default by digital asset brokerage Voyager Digital for failing to make payments on the 15,250 BTC and 350 million USDC loan, worth roughly $671 million at current market rates.
According to Voyager’s press release, the company had approximately $137 million worth of cash and digital assets on hand on June 24, 2022, with additional access to Alameda Ventures’ $200 million worth of USDC and 15,000 BTC.
Speaking to the Wall Street Journal earlier in June, 3AC’s co-founder Kyle Davies revealed that the “Terra-Luna situation” caught the company “very much off guard.” He added that the crypto downturn that followed in the aftermath of the Terra fiasco created major problems for the firm.
3AC’s loan default comes at a time when major cryptocurrency investment firms are struggling to withstand the negative effects of the notably bearish activity permeating the markets. As a result, the stocks of publicly traded companies with exposure to crypto have seen a drastic reduction in their value, in some cases even greater than crypto assets themselves. For context, Bitcoin and Ethereum are down 58% and 69% in the last 6 months, respectively.
The stock price of Voyager Digital is currently showing a 6-month negative price change of 96%. Another prominent publicly traded crypto company and the largest BTC holder, MicroStrategy, is down 65% in the same time period. Coinbase, Riot Blockchain, and Marathon Digital are also down in excess of 70%.
