Voyager issues notice of default to recover $660M from Three Arrows Capital

abdelaziz Fathi

The clock is now ticking for the crypto hedge fund Three Arrows Capital (3AC) to present a plan to meets its financial obligations towards digital asset brokerage platform Voyager Digital.

The board of TSX-listed Voyager Digital has unanimously agreed to issue 3AC a formal notice of default to recover roughly $660 million allegedly loaned to the Singapore-based hedge fund.

The crypto broker, which is backed by an Uber co-founder, revealed that its exposure to Three Arrows Capital includes $350 million in USDC stablecoin along with 15,250 Bitcoins.

Voyager also stated that it is working with lawyers to discuss available options, including pursuing legal action against 3AC should the venture fund – which suffered a major liquidity crisis – be unable to repay its debt. As part of this process, the company has engaged Moelis & Company as financial advisors.

“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” said Stephen Ehrlich, Chief Executive Officer of Voyager.

To kick off its legal procedures, the company had given 3AC until June 24 to make an initial repayment of $25 million. However, Voyager was seeking the rest of the repayments for its entire crypto loan by June 27 before 3AC will be considered in default.

Meanwhile, Voyager Digital has entered into an agreement with Alameda Ventures to extend a previous credit facility, which is intended to help it meet customer liquidity needs. Sam Bankman-Fried-led Alamada Research will extend a credit line of $200 million in cash and USDC alongside a 15,000 BTC revolver.

In addition to this facility, as of June 20, Voyager has approximately $152 million cash and owned crypto assets on hand, as well as $20 million of cash that is restricted for the purchase of USDC.

Alameda’s obligation to provide funding is subject to certain conditions, which include: “no more than US$75 million may be drawn down over any rolling 30-day period; the Company’s corporate debt must be limited to approximately 25 percent of customer assets on the platform, less US$500 million; and additional sources of funding must be secured within 12 months.”

The news of its exposure to Three Arrows has sent shares of Voyager down 60%, currently trading in the $0.70 cent range. Just a week earlier, Voyager stock exchanged hands for $1.60 per share. It saw an all-time high at $32.68 per share back in March 2021.

Voyager is headed by Stephen Ehrlich, the former CEO and founder of retail brokerage Lightspeed Financial who also previously ran the professional trading arm of online stockbroker E*Trade. The startup’s other co-founders include Philip Eytan, an early Uber investor, and Oscar Salazar, the former chief technology officer of the ride-hailing company.

 

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