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According to crypto broker Voyager Digital, Three Arrows Capital has defaulted on $666 million in loans

Crypto broker Voyager Digital GmbH.

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

Voyager Digital announced that it has three arrows capital 15,250 Bitcoin and borrowed $350 million in USD coins. The company first requested a repayment of $25 million in coins by June 24, and then payment of the full balance by June 27. These loans total $666 million based on Bitcoin’s current price. None of these loans have been repaid, it said.

Three Arrows Capital hired legal and financial advisors after suffering heavy losses from a broad market sell-off in digital assets. The hedge fund is evaluating options such as selling assets and having another company rescue it, the company’s founders told the Wall Street Journal last week.

Voyager said it was discussing legal processes to seek compensation for its potential losses. It can’t estimate how much it can reclaim from Three Arrows.

Voyager Digital also said it secured a sizable loan from crypto trading firm Alameda Research to meet “client liquidity needs.” The loan, which includes $200 million in cash and USD coins and 15,000 bitcoin, will be used to “protect client assets amid current market volatility,” Voyager said. The two credit lines will expire at the end of 2024 and will bear interest at 5% pa when they mature.

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 the so-called “crypto winter”. As the Federal Reserve continues to raise interest rates to around higher-than-expected inflation to tame, investors have speculative assets like cryptocurrencies repelled. Major crypto trading companies like 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 bolster its balance sheet.

The crypto market went into a tailspin when Celsius Network LLC, one of the largest crypto lenders, froze customer accounts on June 13th. 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 of all products last Friday, citing unusual liquidity pressures. The company has reached tentative agreements on the repayment times of some debts, but has not allowed repayments to resume.

Neither Alameda nor Voyager were available for further comment. Three Arrows Capital did not immediately respond to a request for comment.

Authors: Vicky Ge Huang at vicky.huang@wsj.com

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Source: Crypto News Deutsch

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