There is a chance that the digital asset market could be affected by the case of Three Arrows Capital.
3AC, as it is also known, is one of the most prominentcryptocurrencies hedge funds and is known for its high leverage bets.
With billions of dollars being wiped off the digital coin market, the hedge fund is facing a potential solvency issue.
Last week, the digital asset broker said it had lent 3AC 15,250 bitcoins and $350 million of the stable coinUSDC. The total loan is more than $600 million. The entire outstanding loan and $25 millionUSDC must be repaid by June 24th.
Last week, Voyager said that it may issue a notice of default if 3AC doesn't repay the money.
The company is talking to its advisors about legal remedies available.
When contacted by CNBC, the two companies were not available for comment.
The shares of the company have plummeted this year.
Three Arrows Capital was founded in 2012 by two people.
He has a very bullish view of the digital currency. He said last year that the world's largest coin could be worth millions of dollars. In May this year, he said that his "supercycle price thesis was sadly incorrect."
Digital currency projects and companies have been hurt by the newcrypto winter
The company is in the process of communicating with relevant parties and is fully committed to working this out, according to a message posted on the company's website.
There wasn't a follow-up about what the issues were.
People familiar with the matter told the Financial Times that U.S.-based BlockFi and Genesis had sold some of 3AC's holdings. 3AC couldn't meet the margin call after borrowing from BlockFi.
An investor has to commit more funds to avoid losses on a trade made with borrowed cash.
The stable coin terraUSD and its sister token luna collapsed.
3AC was exposed to Luna and lost money.
Davies told the Wall Street Journal in an interview that the Terra- Luna situation caught them by surprise.
Three Arrows Capital is facing a credit crunch due to the continued pressure on the price of cryptocurrencies. The virtual currency was around $21,000 on Monday, but is down about half the year.
The steam out of riskier assets has been taken away by the U.S. Federal Reserve's interest rate hikes.
3AC is one of the largest hedge funds that invests in different digital asset projects. There is fear of further spread across the industry.
The vice president of corporate development and international at Luno told CNBC that the value of 3AC's assets has declined greatly with the market.
If there are any large, remaining players that had exposure to them, then there could be a domino effect.
The market slump has caused a number of firms to face liquidity crises. Celsius, which promised users high yields for depositing their digital currency, paused withdrawals for customers due to extreme market conditions.
Babel Finance said this month that it is facing unusual pressures and stopped withdrawals.
CNBC had a contributor to the report.
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