Voyager said it intends to repay the funds, which are loaned as 15,250 bitcoins and $ 350 million in USDC stablecoin, digital tokens whose value is pegged to dollars.
“We work hard and fast to strengthen our balance sheet and seek options so we can continue to meet customer liquidity demands,” said Stephen Ehrlich, Voyager’s chief executive.
The company said in discussions with advisers to check legal remedies.
Three Arrows Capital did not immediately respond to a request for comment.
Debt defaults come at a dangerous moment for cryptocurrencies, as industry players and investors prepare for a “crypto winter,” after a crash in prices, sudden layoffs, and a new and emboldened sense of skepticism that has boiled over to condemnation among critics and market observers . The high level of industrial interconnectedness has also been a warning sign. Because so many companies borrow and invest in each other, the risk to my investors is increased because failure at one institution can affect others.
Across the industry, investors are experiencing staggering losses. Bitcoin, the most popular cryptocurrency, traded on Monday near $ 20,700, well below its November peak of about $ 69,000. Meanwhile, the market value for all cryptocurrencies stands just below $ 1 trillion; seven months ago, that figure approached $ 3 trillion.
Although legacy financial markets have also been worried in recent months – due to fears of an impending recession, historically high inflation, persistent supply shocks caused by the pandemic, and the war in Ukraine – the crypto world has been heavier than the Wall Street. . The S&P 500, considered the benchmark for financial performance over time, has been down 18 percent so far this year.
The depth of bitcoin’s decline highlights the volatile nature of cryptocurrencies and how the astonishing growth that is launching its portfolio into the sky can be easily reversed.
Three Arrows Capital was created in 2012 by Zhu Su and Kyle Davies, and is known for its bullish movement in crypto. Zhu has taken a position that the value of cryptocurrencies will continue to rise as more people invest and their use becomes more playful. But he recently admitted he was wrong, saying on Twitter in May that his thesis was worth “sorry wrong,” adding, “but crypto will still evolve and change the world every day.”
In a subsequent tweet earlier this month, Zhu’s tone became even more appalling. “We are in the process of communicating with the relevant parties and with a commitment to working on this,” he said, without explicitly saying what the issue is or who the relevant parties are. Reports on the financial situation are short -lived.
The day after Zhu’s vague tweet, the Financial Times reported that Three Arrows Capital had failed to meet demands from creditors to share extra funds after bets on digital currency had gone wrong.
The loan default follows a decision by an embattled cryptocurrency bank Celsius to stop the withdrawal by almost 2 million users, sending shock waves through the crypto market, and underscoring concerns that the sector’s biggest names lack useful financial oversight. However, the chances of flood disruption to the larger economy appear to be limited.
Excessive theft has also plagued crypto investors, increasing skepticism from critics asking about the financial vulnerabilities of digital currencies.
Last week, blockchain company Harmony announced that hackers had seized approximately $ 100 million in cryptocurrency by exploiting the company’s ethereum and the Binance Chain bridge. The blockchain functions as a decentralized ledger, a record of transactions that is publicly available and verifiable but not managed by a single entity. Blockchain bridges can be used as a means of decentralized transfer between ledgers.
As the value and popularity of my tokens have increased in recent years, so has the malicious interest among criminals. Crypto -related crime reached an all -time new high of $ 14 billion last year, according to research from Chainalysisin 2020 it will increase from $ 7.8 billion.
Although many first -time investors engage in the promise of digital currency, and the returns are sometimes staggering, the market has moved into a more pessimistic posture.
As interest rates rise and various economic difficulties drag companies flying high, investors are also fleeing from speculative assets, such as cryptocurrencies. Some of the biggest players in the industry, including Coinbase and Gemini, have positions eliminated and hiring frozenreflects the icy mood that now defines a market that was once hot.
