Three Arrows Capital on Edge of Default

The decentralized finance (DeFi) universe may see another shaking up, if Three Arrows Capital (3AC) is unable to pay off the loan it took from Voyager Digital. According to the latter, it had allegedly loaned a whopping $657 million to the former. Analysts have said that the ability of 3AC to repay the loan could help in assessing the platform’s ‘survivability’ in the current turmoil of the market.

Loan Repayment is Due

On Wednesday, Voyager revealed that 3AC was loaned a total of 15,250 BTC, which were valued at $307 million at the time of writing, and cash worth $350 million. A payment of $25 million has to be made by June 24th and the remaining balance will become due on June 27th.

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This means that the crypto hedge fund has only a few days until it has to return the full loan and Voyager said that if 3AC fails to do so, then it will be considered at default. The company said that they have full intention of making a recovery and would explore the legal remedies at their disposal after talking to the advisors. At this point, it said that it was unable to predict how much it would be able to recover from 3AC.

According to market analysts, the exposure of Voyager to 3AC also raises questions about the former’s survivability as well. Voyager was founded in 2018 and this publicly-traded crypto platform gives investors the ability to trade more than 100 crypto assets. Plus, they can also earn yields of about 12% on their crypto assets.

Last week, reports had said that Three Arrows Capital was considering the idea of selling its assets, along with a rescue from another company. The hedge fund had suffered from massive losses recently in the sell-off that occurred in the market.

Voyager Could Be in Trouble

Market analysts said that there was a good chance that customers would begin pulling their assets from the Voyager platform as well, which had a valuation of $5.5 billion in March. They said that whether the platform can continue or not would depend on how it deals with its 3AC exposure and the number of customer redemptions.

The situation with 3AC has seen Voyager’s stock take a heavy beating, as it had around 57% of its value in a day. Likewise, the price of VGX, the platform’s native token, is also suffering, as it plunged by more than 20% in a day and has declined by 45% in a month. While Voyager is trying to recover money from 3AC, it also disclosed that it had signed a deal for a revolving credit line with Alameda Research recently for $200 million cash and USDC and $310 million Bitcoin.

The purpose of this credit line is to protect the customer assets of Voyager in light of the volatility that can be seen in the crypto market. 3AC is not the only company in trouble right now, as there are others like Celsius Network that are also struggling.