Crypto Broker Voyager Digital Suspends Withdrawals
Firm says it is exploring strategic alternatives, after issuing notice of default to crypto hedge fund Three Arrows Capital
Crypto broker Voyager Digital VOYG -17.14%▼ said on Friday afternoon that it is temporarily suspending trading, deposits, withdrawals and loyalty rewards.
“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 of Voyager, said in a statement.
On Wednesday, Voyager issued a notice of default to crypto hedge fund Three Arrows Capital after it failed to repay a loan of 15,250 bitcoin and $350 million in USD Coin, a stablecoin whose value is pegged to the dollar. The loan is equivalent to about $646 million based on bitcoin’s current price.
Other crypto firms have been hampered by a recent plunge in prices. Crypto lender BlockFi said on Friday that it signed a definitive agreement with crypto exchange FTX for a $400 million credit facility and the option to buy the company for $240 million. BlockFi said it lost $80 million from its exposure to Three Arrows Capital.
Voyager said it intends to pursue all available remedies for recovery from Three Arrows, including through the court-ordered liquidation process in the British Virgin Islands. Crypto exchange Deribit is among the creditors that sued the hedge fund there for debts owed, The Wall Street Journal reported.
Shares of Voyager, which are traded on the Toronto Stock Exchange, are down more than 96% this year, according to FactSet data. The stock, which was trading at $25 in November, has plummeted to 58 cents, giving the company a market value of $114 million.
The crypto brokerage was midsize. In a May business update, Voyager said it had 3.5 million verified users and $5.8 billion in assets, a decline from November’s $7 billion.
In June, Voyager Digital said it secured a loan from crypto-trading firm Alameda Research that includes $200 million in cash and USD Coin and 15,000 bitcoin to meet customer liquidity needs.
On Monday, the firm said it had used $75 million from the line of credit to facilitate customer orders and withdrawals and may use more. The two lines of credit expire at the end of 2024 and carry an annual interest rate of 5% payable on maturity.
The company has hired Moelis & Co. and the Consello Group as financial advisers, and Kirkland & Ellis LLP as legal advisers.