New fears of further contagion across the crypto industry – One of the most prominent crypto hedge funds just defaulted on a $670 million loan.

Prominent crypto hedge fund Three Arrows Capital has defaulted on a loan worth more than $670 million. Digital asset brokerage Voyager Digital issued a notice on Monday morning, stating that the fund failed to repay a loan of $350 million in the U.S. dollar-pegged stablecoin, USDC, and 15,250 bitcoin, worth about $323 million at today’s prices.

3AC’s solvency crunch comes after weeks of turmoil in the crypto market, which has erased hundreds of billions of dollars in value. Bitcoin and ether are both trading slightly lower in the last 24 hours, though well off their all-time highs. Meanwhile, the overall crypto market cap sits at about $950 billion, down from around $3 trillion at its peak in Nov. 2021.

3AC, which is one of the biggest crypto-focused hedge funds, has borrowed large sums of money from various companies and invested across a number of different digital asset projects. That has sparked fears of further contagion across the industry.

„The issue is that the value of their [3AC’s] assets as well has declined massively with the market, so all in all, not good signs,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.

„What’s to be seen is whether there are any large, remaining players that had exposure to them, which could cause further contagion.”

Source: CNBC