Three Arrows Capital, a cryptocurrency hedge fund, is at risk of defaulting on $675 million U.S. in loans, a situation that could impact the global market for digital coins and tokens.
Singapore-based Three Arrows is one of the largest and most prominent cryptocurrency hedge funds. But it is facing a liquidity and solvency issue as billions of dollars have been wiped off the cryptocurrency market in recent weeks as prices for Bitcoin (BTC), Ethereum (ETH), and other digital assets have plunged.
Voyager Digital (VOYG), a cryptocurrency brokerage firm, lent Three Arrows 15,250 Bitcoins and $350 million of the stablecoin USDC, totaling $675 million U.S. The entire loan is due to be paid back today (June 27).
None of the loan has been repaid yet, Voyager said last week, adding that it may issue a “notice of default” if Three Arrows does not pay the money back.
Voyager, which is listed on the Toronto Stock Exchange, has seen its shares fall 95% this year.
Three Arrows Capital was established in 2012. The onset of a so-called “crypto winter” has hurt digital currencies and related companies across the board in recent weeks.
Three Arrow Capital’s problems appeared to begin earlier in June when it was unable to meet a margin call. A margin call is when an investor has to commit more funds to avoid losses on a trade made with a loan or borrowed money.
Bitcoin, the largest cryptocurrency, is hovering just above $21,000 U.S. today and is down 53% year to date.
