Crypto Broker Voyager Digital Says Three Arrows Capital Hasn’t Repaid $666 Million in Loans

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Crypto broker

Voyager Digital Ltd.

VOYG -50.63%

said it may issue a notice of default to Three Arrows Capital Ltd. if the crypto hedge fund fails to make a loan repayment by June 27. 

Voyager Digital said it lent 15,250 bitcoin and $350 million in USD Coin to Three Arrows Capital. The company initially asked for a repayment of $25 million USD Coin by June 24 and then asked for the entire balance to be paid by June 27. These loans amount to $666 million based on bitcoin’s current price. Neither of these loans has been repaid, it said. 

Three Arrows Capital hired legal and financial advisers after suffering heavy losses from a broad market selloff in digital assets. The hedge fund is exploring options including asset sales and a rescue by another firm, the firm’s founders told The Wall Street Journal last week.

Voyager said it is discussing legal processes to seek compensation for its potential losses. It is unable to assess how much it will be able to recover from Three Arrows.

Voyager Digital also said it secured a substantial loan from crypto trading firm Alameda Research to meet “customer liquidity needs.” The loan, which includes $200 million in cash and USD Coin and 15,000 bitcoin, will be used to “safeguard customer assets in light of current market volatility,” Voyager said. The two lines of credit expire at the end of 2024 and carry an annual interest rate of 5% payable on maturity.

Voyager shares, which trade on the Toronto Stock Exchange, are down 95% this year, according to FactSet data. 

Many crypto companies are under liquidity pressure in what has been dubbed “crypto winter.” As the Federal Reserve continues to raise interest rates to tame higher-than-expected inflation, investors have been dumping speculative assets such as cryptocurrencies. Large crypto-dealing companies such as

Coinbase Global Inc.

, BlockFi, and Crypto.com have announced hundreds of job cuts, partly in response.

On Tuesday, Crypto lender BlockFi signed a term sheet to secure a $250 million revolving credit line from Alameda founder

Sam Bankman

-Fried’s FTX exchange to boost its balance sheet.  

The crypto market was sent into a tailspin when

Celsius

Network LLC, one of the largest crypto lenders, froze customer accounts on June 13. Celsius hasn’t let users withdraw funds for more than a week due to “extreme market conditions.” Asia-based crypto lender Babel Finance suspended redemptions and withdrawals from all products last Friday, citing unusual liquidity pressures. The firm reached preliminary agreements on the repayment period of some debts, but it hasn’t allowed redemptions to resume.

Neither Alameda nor Voyager were available for further comment. Three Arrows Capital didn’t immediately respond to a request for comment. 

Write to Vicky Ge Huang at [email protected]

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