Voyager Digital plunges 60% after revealing $ 661 million exposure to 3AC

Voyager Digital announced today that it may issue a “default notice” to the struggling crypto-investment firm Three Arrows Capital (3AC) if it fails to repay a loan.

Shares in the New York-based crypto platform fell more than 60% after revealing that its exposure to 3AC includes 15,250 BTC (approximately $ 311 million in current prices) and $ 350 million in USDC.

The New York-based firm claims that it made an initial request for repayment of $ 25 million in USDC by June 24, 2022, with a subsequent request for repayment of the entire amount due in USDC and BTC by June 27, 2022.

“None of these amounts have been repaid and 3AC’s non-refund of any of the requested amounts within these specified dates will constitute a default event,” the statement reads.

Voyager added that it “intends to pursue recovery from 3AC” and is currently in discussions with its advisers “regarding the available legal means.”

However, the company admitted that it “is not able to assess at present the amount it will be able to recover from 3AC.”

Last week, Voyager secured a revolving line of credit from Alameda Research, including a cash / USDC-based credit facility with a total principal of $ 200 million and a revolving credit facility of 15,000 BTC.

Is 3AC insolvent?

Singapore-based 3AC – one of the largest crypto-hedge funds, at least until recently – was rumored to be on the verge of insolvency after allegedly failing to accommodate margin calls from several lenders, including BlockFi and financial firm Genesis Trading.

While BlockFi did not directly confirm that it had taken action on Three Arrows’ position, the company’s CEO Zac Prince tweeted last Thursday that a “large customer … failed to meet its obligations on an secured margin loan.”

“We fully expedited the loan and liquidated or hedged all the associated collateral,” Prince said, adding that “no client funds are affected.”

Genesis Trading CEO Michael Moro followed suit with one similar message the following day, several of 3AC’s major lenders, including the BitMEX cryptocurrency exchange, confirmed that they had liquidated their positions with the investment company.

Although 3AC has been largely silent about its apparent liquidity crisis, co-founder Kyle Davies told Wall Street Journal Friday that the firm has hired legal and financial advisors “to help find a solution for its investors and lenders.”

Davies also suggested that 3AC may have more options on the table, including the sale of assets or a possible rescue package from another company.

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