- Voyager has halted withdrawals, trading, deposits and loyalty rewards on its platform in a bid to buy more time, it said
- “Strategic alternatives” to its withdrawals are being sought after in a bid to navigate its liquidity headaches following 3AC’s insolvency
Crypto lender Voyager has become the latest firm caught up in the market contagion spurred on by Three Arrows Capital’s (3AC) downfall and the ongoing liquidity crisis impacting some of crypto’s biggest names.
In a letter to users on Friday, the lender 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.”
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. It’s an about-face to its recent statement last week when Voyager said it was continuing to operate and fulfill customer orders and withdrawals.
In a tweet thread on Saturday, the lender 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 3AC entered into liquidation following a British Virgin Islands court order last week. The Singapore-based 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.
Crypto lender Babel Finance – said to become the next domino to fall victim to “insolvency or default” – has hired US investment bank, Houlihan Lokey, following a pause to Babel’s withdrawals last month. Celsius, another major embattled lender, is resisting calls from its lawyers to file for Chapter 11 bankruptcy as it attempts to navigate its own headaches following a freeze to withdrawals 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%. A halt to the publicly-traded company’s withdrawals follows in the wake of other lenders on their inability to payout those yields based on a shortage of industry capital and liquidity.
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.”
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