Crypto hedge fund Three Arrow Capital defaults on $670 million loan as liquidity dries up across the sector

• Three Arrow Capital defaulted on a $670 million loan Monday, according to Voyager Digital.
• The loan was comprised of roughly 15,000 bitcoin and $350 million worth of the stablecoin USDC.

Cryptocurrency hedge fund Three Arrow Capital defaulted on a $650 million loan Monday, according to lender Voyager Digital.

The loan is comprised of roughly 15,000 bitcoin and $350 million worth of the stablecoin USDC. The failure to pay is the latest blow to the hedge fund which previously saw a tranche of its positions liquidated by BlockFi and Genesis.

"We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands," said Voyager CEO Stephen Ehrlich.

Voyager said it would attempt to recover funds from Three Arrow Capital, also known as 3AC, and was in contact with its legal team to map out next steps. Voyager added that 3AC's default hasn't affected its platform and that it had $137 million worth of crypto and cash assets on hand to fulfill orders.

But the default added to the liquidity problems in the cryptocurrency sector, which fell below a $1 trillion market capitalization as some of the largest cryptos have tumbled.

Voyager recently put a limit on customer withdrawals over $10,000 on Thursday in anticipation of 3AC defaulting on its loan.

Recently, Sam Bankman-Fried's crypto trading platform FTX has provided emergency liquidity, giving a $250 million loan to BlockFi last week. The week before that, he gave Voyager Digital a loan that totalled about $485 million in cash and crypto.

And earlier this month, crypto lending platform Celsius completely paused withdrawals while crypto exchange Coinflex froze clients' assets.