Crypto brokerage Voyager Digital issued a notice of default to crypto hedge fund Three Arrows Capital (3AC) on Monday for failure to repay its loans.
The loans totaled around $665 million, consisting of 15,250 Bitcoin, currently worth about $315 million, and $350 million worth of USD Coin (USDC).
Last week, Voyager disclosed it requested 3AC repayment of $25 million USDC by June 24, and repayment of the entire balance of USDC and BTC by June 27. Voyager is now saying that 3AC has defaulted, and that it “intends to pursue recovery from 3AC and is in discussions with the Company’s advisors as to legal remedies available,” according to a statement.
3AC’s troubles come after a combination of several factors have hit the crypto markets. Crypto has been declining since early May, and the collapse of the Terra algorithmic stablecoin TerraUSD (UST) that month, and its sister cryptocurrency Luna, set off a domino effect in the crypto space. In early June, Celsius Network, one of the largest cryptocurrency lenders, paused its withdrawals and faced rumors of bankruptcy. Soon after, reports concerning the state of 3AC followed, fueling fears of contagion and systemic risk. Though the crypto market has started to somewhat recover, questions remain about how the fallout will shape the future of the space.
As of Friday, Voyager had approximately $137 million in cash and crypto assets on hand, the statement says. Additionally, Voyager has previously announced a $200 million in cash and USDC revolver, or line of credit, and a 15,000 Bitcoin revolver from quant trading shop Alameda Ventures.
From the Alameda line of credit, Voyager has accessed $75 million, the brokerage said, and may be able to access more funds as needed.
“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” Stephen Ehrlich, chief executive officer of Voyager, said in the release.
Amid the crypto downturn, many other platforms have also received lines of credit from big fish in the crypto space.
Crypto lending platform BlockFi announced it had signed a term sheet with FTX to secure a $250 million revolving line of credit. BlockFi also seemingly had exposure to 3AC, with BlockFi CEO Zac Prince tweeting that the company had to liquidate “a large client that failed to meet its obligations on an overcollateralized margin loan.”
Voyager declined to comment to Fortune beyond its press release, and 3AC did not immediately respond to Fortune’s requests for comment.
