Voyager Digital Commences Financial Restructuring Process to Maximize Value for All StakeholdersThis was following the announcement from the company on June 22 that they had big exposure to Three Arrows Capital (3AC) in the kind of unsecured loans. “Voyager concurrently announced that its operating subsidiary, Voyager Digital, LLC, might release a notice of default to Three Arrows Capital (” 3AC”) for failure to repay its loan. – Voyager Press ReleaseIn our June 16 release, following the announced insolvency of 3AC, we hypothesized on the possibility of Voyager direct exposure to 3AC in our issue, Fears Of Further Contagion.
The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazines premium markets newsletter. To be among the very first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.In Case You Missed It: Bitcoin Magazine Pro Special Edition Contagion Report Early on July 6, 2022, it was revealed that Voyager has declared Chapter 11 insolvency. Voyager Digital Commences Financial Restructuring Process to Maximize Value for All StakeholdersThis was following the statement from the firm on June 22 that they had big direct exposure to Three Arrows Capital (3AC) in the kind of unsecured loans. “Voyager concurrently revealed that its operating subsidiary, Voyager Digital, LLC, might issue a notification of default to Three Arrows Capital (” 3AC”) for failure to repay its loan. Voyagers exposure to 3AC includes 15,250 BTC and $350 million USDC. The Company made an initial request for a payment of $25 million USDC by June 24, 2022, and consequently requested repayment of the entire balance of USDC and BTC by June 27, 2022. Neither of these amounts has been paid back, and failure by 3AC to pay back either asked for amount by these specified dates will constitute an event of default.” – Voyager Press ReleaseIn our June 16 release, following the announced insolvency of 3AC, we speculated on the likelihood of Voyager exposure to 3AC in our concern, Fears Of Further Contagion.” With the current advancements, reports have been flying, with speculation that numerous crypto lending/borrowing desks have actually been hit from insolvency.” While it is unsure which companies may have experienced any balance sheet problems, there is a large possibility of losses throughout companies in the industry, and its likely that we havent seen the dust settle.” Shares of crypto custody/borrowing company Invest Voyager ($ VOYG) have fallen 33% over the past two days. The firms newest quarterly release showed that the business had provided $320 million to a Singapore-based entity (house of 3AC before relocation). Despite whether the loan was to 3AC, the collapse in share cost is certainly not a vote of confidence by the market for a U.S.-based public crypto lending platform.” – Fears Of Further ContagionNow, with the statement of Voyagers bankruptcy procedures, some intriguing findings can be seen in the insolvency filings.In the businesss filing, it was reported that Alameda Research has borrowed $376 million from Voyager, for unidentified reasons. Link to filingWhile it is somewhat curious that the firm supposedly is working to fortify the industry and stem the balance sheet contagion is presently obtaining cash from an insolvent firm (that Alameda holds 9.49% ownership in), there are a couple of reasons that pertain to mind.It is not unusual for an exclusive trading desk to obtain capital in the cryptocurrency market (particularly denominated in properties aside from the dollar). Considered that Voyagers possessions (that were mostly customer deposits) were partly bitcoin denominated, Alameda might potentially be borrowing BTC to use for market making/shorting, in which they would intend to cover the loan at a later date. Although the regards to the loan are undefined, given Alamedas ownership stake in Voyager, it would make sense that the company would not employ the loan, which would decrease expected interest revenues. It is our belief that it will take the marketplace either lower rates and/or substantial time to recuperate from the damage suffered in recent months, from both a balance sheet impairment point of view as well as a reputational/legitimacy perspective..