Voyager Digital LLC has announced that they are suspending most client account functions in the fallout of 3AC’s loan default.
The cryptocurrency market is in the midst of yet another bear market, but this one certainly seems to be casting a light on just how reckless investors got during the bubble of the past few years. Crypto wallet and platform Voyager announced today that they have suspended trading, deposits, withdrawals, and loyalty rewards as of 2:00 p.m. EDT today.
“This was a tremendously difficult decision, but we believe it is the right one given current market conditions, This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together. We will provide additional information at the appropriate time.” – Stephen Ehrlich, Chief Executive Officer of Voyager.
Voyager and their clients now find themselves caught in the fallout of Three Arrows Capital’s (3AC) $670 million loan default. As of June 30, 2022, Voyager held $685 million of crypto assets on their balance sheet with $1.1 billion in crypto assets lent. This kind of reckless lending has become pervasive in the cryptocurrency markets in recent years. Voyager has engaged Moelis & Company and The Consello Group as financial advisors, and Kirkland & Ellis LLP as legal advisors to help them consider strategic alternatives.
Voyager posted a FAQ for clients who are left holding the bag for their reckless lending:
When will I be able to access assets on the platform?
We understand the significant impact of this decision, and we are working quickly to lift the suspension on trading, deposits, withdrawals, and loyalty rewards. We will provide updated information as soon as it becomes available.
While we are not in a position to announce anything else today, we are hopeful that we will have more to share soon. We will continue to keep you updated.
Is the app still working?
You will still be able to view market data and track your portfolio in the app, you will receive rewards payments for the month of June, and we plan to continue to pay monthly rewards in July.
I have a Voyager debit card. How is it impacted by this announcement?
Your debit card will stop working. You will need to stop any direct deposits currently going into the account connected to your debit card, as well as any automatic payments made from that account.
What does “exploring strategic alternatives” mean? Is Voyager up for sale?
We are in discussions with various parties regarding additional liquidity and the go-forward strategy for the company. While we don’t have anything else to share today, we are working diligently and hope to have more information to share soon.
What is happening at Three Arrows Capital? Why haven’t they repaid your loan(s)? Press reports state they have been forced into liquidation; what does that mean?
Questions about the status of Three Arrows Capital (3AC) should be directed to them.
Voyager is actively pursuing recovery from 3AC through the court-ordered liquidation process in the British Virgin Islands and intends to pursue all other available remedies as well.
Today’s news is unfortunate for people who use Voyager’s crypto platform responsibly, but this highlights a failing of the entire DeFi movement. Just how different is this fantasy world of crypto than traditional banking when the same kind of excessive lending and risk-taking can bring markets to collapse? It remains to be seen if Voyager will be able to retrieve the hundreds of millions of dollars in crypto assets lent to 3AC, but as of right now they are left holding the bag.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
At the time of this article, Shacknews primary shareholder Asif A. Khan held cryptocurrency assets at Voyager Digital’s cryptocurrency platform.
Asif Khan is the Luminary and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary’s Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.