Voyager Issues Notice of Default to 3AC for Loan Repayment Failure

Crypto brokerage, Voyager Digital, has issued a notice of default to Three Arrows Capital (3AC) after they failed to repay their loans of 15,250 Bitcoin and $350 million in USDC, according to a press release Monday. The company plans to recover as much as possible, and is working with their legal team to do so. 

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

This announcement comes five days after a previous statement from Voyager Digital, which expressed they would issue a notice of default if the hedge fund didn’t repay their loan. Today that reality became official. 

Voyager also announced they have drawn down $75 million of their allotted emergency fund of $200 million cash and USDC credit revolver from Alameda Ventures. Alameda also included a revolver of 15,000 Bitcoin. 

The day after finalizing the loan with Alameda Ventures, Voyager tightened their daily withdrawal limit from $25,000 to $10,000 and limited the number of daily withdrawals to 20. 

Voyager currently has $137 million of cash and crypto on hand at their disposal if needed and is still entrusting investment banker Moelis & Company as their financial advisor. 

The woes for 3AC started when LUNA, the native cryptocurrency to the Terra Network, collapsed from $61 to mere pennies in the course of three days. This was the same network crash that saw their stablecoin, UST, depeg from its $1 and drop to virtually zero. 3AC invested about $200 million in LUNA, according to their co-founder Kyle Davies. After the crash, they had essentially nothing to show for that investment. 

While Davies said the hedge fund was able to handle those losses, the ensuing crypto market decline created the real problem for 3AC. “The Terra-Luna situation caught us very much off guard,” Davies said, but they were still able to recover from the losses. However, the steady decline in Bitcoin and Ether became too much for the firm to handle. 

They then received over $400 million in liquidations from various crypto lending firms, which created the insolvency problems. 

Author: Tyler Irvin

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