MIAMI, FLORIDA – JANUARY 18: Stephen Ehrlich, CEO and co-founder of Voyager Digital Ltd., speaks at … [+]
Toronto-based digital asset brokerage Voyager Digital has become the latest crypto firm to face solvency issues as a result of the recent crypto crash. Today it requested a loan repayment from troubled proprietary trading Three Arrows Capital (3AC), announcing that it “may issue a notice of default.”
Voyager’s exposure to 3AC is in excess of $650 million based on current prices. Specifically, it consists of 15,250 bitcoin, approximately $307 million based on crypto’s current price, and $350 million worth of stablecoin USDC USDC per the company’s statement.
Voyager initially made a request for repayment of $25 million USDC from the Singapore-based hedge fund by June 24 before subsequently requesting a repayment of the entire balance of USDC and BTC BTC by June 27. However, it is unsure what to expect.
“The Company is unable to assess at this point the amount it will be able to recover from 3AC,” Voyager stated in a press release.
The fact that the company is in this situation stems from its need to generate yield to compensate users for depositing funds on the platform. Although primarily known as an exchange where users can trade various tokens, Voyager also pays users interest rates as high as 9%. Naturally, the company would need to generate yields in excess of these amounts to generate those returns.
Today’s announcement represents an escalation of the company’s fight for solid financial footing in the midst of market chaos. The exchange was able to secure a revolving line of credit from Alameda Ventures, a quantitative trading firm founded by billionaire FTX CEO Sam Bankman-Fried. In fact, Bankman-Fried has become akin to a lender of last resort in the past week, as FTX agreed to provide BlockFi a $250 million revolving credit facility after the company said it would lay off about 20% of its staff. Bankman-Fried has positioned himself as a sort of crypto savior to struggling firms.
Alameda’s credit line also included a cash/USDC-based credit facility with a total availability of $200 million and a revolving credit facility for 15,000 BTC. It is currently the largest holder in Voyager, with nearly a 12% stake according to Bloomberg data.
This credit line may have initially worked in some circles as equity research firm BTIG initially maintained Voyager Digital stock (VOYGF VO ) a ‘Buy’ rating on its stock Wednesday morning. However, it was immediately downgraded an hour later to ‘Neutral’ per its latest report when Voyager CEO Steve Ehrlich revealed the true extent of the company’s exposure to 3AC. Based on their assessment, the firm believes the stock “is likely to trade within +/- 15% from current levels over the next 12 months.”
The stock itself has fallen over 60% since news broke Wednesday, dropping to $0.57 this morning before stabilizing at around $0.80 since. Though Coinbase and Robinhood, two of the most well-known crypto exchanges, have also seen their stocks tumble 77.65% and 51.80% respectively, Voyager’s stock has fallen by a massive 94% this past year.
Voyager, Coinbase, and Robinhood have all seen price decreases in their stock in the past year.
