Voyager digital files for bankruptcy
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In early July 6, 2022, it was announced that Voyager had filed for Chapter 11 bankruptcy.
Voyager Digital launches financial restructuring process to maximize value for all stakeholders
This was after the company’s announcement on June 22 that they had large exposure to Three Arrows Capital (3AC) in the form of unsecured loans.
Voyager also announced that its operating subsidiary, Voyager Digital, LLC, may issue a default notice to Three Arrows Capital (“3AC”) for non-repayment of the loan. Voyager’s exposure to 3AC consists of BTC 15,250 and $ 350 million. an initial request for repayment of $ 25 million USDC by June 24, 2022, and then requested repayment of the full balance of USDC and BTC by June 27, 2022. None of these amounts have been repaid, and 3AC has failed to repay one of the amounts requested within these specified dates will constitute a default event. ” – Voyager press release
In our June 16 release, following the announced insolvency of 3AC, we speculated on the likelihood that Voyager would be exposed to 3AC in our issue, Fears Of Further Contagion.
“With the latest developments, rumors have been circulating, with speculation that several crypto lending / borrowing tables have been hit by insolvency.
“Although it is uncertain which companies may have experienced a loss of balance, there is a great possibility of losses across companies in the industry, and it is probable that we have not seen the dust settle.
«The shares in the crypto deposit / loan company Invest Voyager ($ VOYG) have fallen 33% in the last two days. The company’s latest quarterly release showed that the company had lent $ 320 million to a Singapore-based unit (the home of 3AC before moving). Regardless of whether the loan was for 3AC, the collapse in the share price is certainly not a declaration of confidence from the market for a US-based public crypto-lending platform. ” – Fear of further infection
Now, with the announcement of Voyager’s bankruptcy proceedings, some interesting findings can be seen in the bankruptcy archives.
In the company’s archives, it was reported that Alameda Research has borrowed $ 376 million from Voyager, for unknown reasons.
Link to archiving
Although it is a bit strange that the company is supposedly working to support the industry and stem the tide of contagion in the balance sheet currently borrowing money from an insolvent company (in which Alameda has 9.49% ownership), there are some reasons thoughts.
- It is not uncommon for a proprietary trading desk to borrow capital in the cryptocurrency industry (specifically denominated in assets other than dollars).
- Given that Voyager’s assets (which were largely customer deposits) were partly denominated in bitcoin, Alameda could possibly borrow BTC to use for market making / shorting, where they would aim to cover the loan at a later date.
- Although the terms of the loan are unspecified, given Alameda’s stake in Voyager, it would make sense for the company not to call off the loan, which would lower expected interest income.
It is our belief that it will take the market either lower prices and / or considerable time to recover from the damage in recent months, both from a balance sheet deterioration perspective and a reputation / legitimacy perspective.
