I recently had the same problem with my Kora Hermes II dac. At first I thought it was a problem with my integrated amp, so I swapped in another amp and it was still there.
In discussing the problem with my local tech, he suggested the dac's output voltage may be overdriving the integrated's preamp section. He mentioned that a lot of tube dacs dump a high (7+) voltage unfiltered signal to the pre that (typically) is expecting only the industry standard 2 volts.
I don't know what the DAC-3's output voltage is but I'd ask the ARC tech support if this might be an issue.
In discussing the problem with my local tech, he suggested the dac's output voltage may be overdriving the integrated's preamp section. He mentioned that a lot of tube dacs dump a high (7+) voltage unfiltered signal to the pre that (typically) is expecting only the industry standard 2 volts.
I don't know what the DAC-3's output voltage is but I'd ask the ARC tech support if this might be an issue.