Voyager Seeks ‘Strategic Alternatives’ Following Pause to Withdrawals
Voyager said it holds $1.3 billion in crypto assets on its platform, as well as claims of more than $650 million against Three Arrows Capital
blockworks exclusive art by axel rangel
key takeaways
- Voyager has halted withdrawals, trading, deposits and loyalty rewards on its platform in a bid to buy more time, it said
- The cryptocurrency lender has faced liquidity troubles after Three Arrows Capital’s insolvency
Cryptocurrency lender Voyager is the latest firm caught in market contagion spurred by Three Arrows Capital’s (3AC) downfall, which has triggered liquidity crises across the digital asset industry.
In a letter to users on Friday, Voyager said it was suspending trading, deposits, withdrawals and loyalty rewards on its platform in a bid to buy time while it seeks out “strategic alternatives.”
It’s an about-face to its recent statement last week, when Voyager said it was continuing to operate and fulfil customer orders and withdrawals.
Blockworks attempted to contact Voyager to understand its exposure risk to a further slide in crypto prices and what its “strategic alternatives” might allude to, but has not yet received a response.
In a tweet thread on Saturday, Jersey City company said it currently holds roughly $1.3 billion worth of crypto assets on its platform in addition to claims of more than $650 million against 3AC. Voyager also said it held more than $350 million in cash at New York’s Metropolitan Commercial Bank.
“[Federal Deposit Insurance Corporation] insurance does not protect against the failure of Voyager, any act or omission of Voyager or its employees, or the loss in value of cryptocurrency or other assets,” the bank said in a statement on Sunday. “The standard FDIC insurance coverage amount is currently $250,000 per depositor for each account.”
Multiple companies continue to chafe under unsavory market conditions furthered by revelations of 3AC entering liquidation following a British Virgin Islands court order last week.
The Singapore-based hedge fund firm filed for Chapter 15 bankruptcy on Friday while founders Kyle Davies and Zhu Su have been unable to be located, according to the law firm representing 3AC in New York.
Hong Kong crypto lender Babel Finance has now hired US investment bank, Houlihan Lokey, following a pause to Babel’s withdrawals last month, hinting it could be the next domino to fall into insolvency or default.
Celsius, another major platform offering yield on deposits, is resisting calls from its lawyers to file for Chapter 11 bankruptcy as it attempts to navigate its own headaches following a withdrawal freeze on June 12.
“3AC’s investment ‘thesis’ could be easily described as ‘get in, take loans, hype and hope,'” Anna Becke, CEO of AI trading platform EndoTech told Blockworks in an email. “They bet on demi-frauds like Terra and took risky loans from other organizations (some of whom have since filed for bankruptcy), all with the veneer of a thesis-based hedge fund. 3AC represents the worst of crypto investing and is another reason crypto investors are shaken.”
Like the industry’s other lenders, Voyager allows users to trade and earn a yield on crypto assets up to 12%.
While a definitive timeframe on when the restrictions would be lifted was not given, Voyager said Saturday it was “working quickly” to restore services and would provide an update “as soon as it becomes available.”
Voyager stock has collapsed by almost 60% since it first announced its exposure to 3AC’s demise, from around CAD$0.58 ($0.45) to CAD$0.30 ($0.23). Its native token VGX has shed a similar amount.
This article was updated at 7:46 am ET to include the Voyager stock price chart.
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