- Crypto Hedge three Arrows was unable to satisfy the demands of its lenders for more money.
- Global investors are selling off speculative assets as the world’s economy is weakening.
- Su Zhu and Kyle Davies were known for making leveraged bets on the value of cryptocurrencies.
Three Arrows Capital defaulted on a $670m loan. Voyager Digital said the fund failed to repay $350 million in USDC and 15,250 bitcoin, worth $323 million at today’s prices.
3AC’s solvency crunch follows weeks of market turmoil that erased hundreds of billions of dollars. Bitcoin and ether are trading lower in the last 24 hours, but off their highs. The crypto market cap is $950 billion, down from $3 trillion in November 2021.
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Voyager plans 3AC recovery (Three Arrows Capital). The broker said the platform is still accepting orders and withdrawals. This assurance may be an attempt to prevent crypto-wide contagion.
Voyager CEO Stephen Ehrlich said, “We’re working quickly to strengthen our balance sheet and pursue options to meet customer liquidity demands.”
Voyager said it owned $137 million in crypto assets as of Friday. The company has a $200 million cash and USDC revolver and a 15,000 bitcoin ($318 million) revolver from Alameda Ventures.
Alameda (FTX founder Sam Bankman-quantitative Fried’s trading firm) financed crypto brokerage Voyager Digital last week. Voyager has already borrowed $75 million.
“3AC’s default does not affect Alameda’s agreement,” added the statement.
Zhu Su and Kyle Davies founded 3A in 2012.
Zhu is a bitcoin bull. Last year, he estimated the world’s largest cryptocurrency could be worth $2.5 million. As the crypto market crashed in May, Zhu tweeted that his “supercycle price theory was erroneous.”
“Crypto winter” has affected digital currency projects and companies.
Three Arrow Capital’s troubles arose earlier this month after Zhu tweeted that the company is “in the process of speaking with relevant stakeholders”
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