Voyager Digital’s stock price plummeted more than 60% on Wednesday, and has fallen 95% from its peak in November last year. The company has previously said it could lose more than $650 million after it lent a $350 million stablecoin USDC and 15,250 bitcoins to Three Arrows Capital, the largest hedge fund in the troubled cryptocurrency market.
Voyager’s operating model is to reward retail investors for depositing cryptocurrencies, offering debit cards and an app for digital asset trading, and the company promises returns of up to 12%.
As of the end of March, Voyager’s crypto assets payable to customers had reached $5.5 billion, including $840 million worth of stablecoin USDC and 33,000 bitcoins, but Three Arrows Capital’s Margin Call pushed it into a corner.
Voyager has said it is asking Three Arrows to repay the initial $25 million in USDC by June 24, and the full USDC and Bitcoin by June 27.
The company also added that both payments were outstanding and that “the amount that can be recovered cannot be assessed at this time” and that it is now in talks with Three Arrows Capital advisors “on the legal remedies available.”
And just earlier this month, Voyager claimed that the company “differentiates itself from counterparties by working with a select group of reputable counterparties and a direct, low-risk approach to loan and asset management.” At the time, CEO Stephen Ehrlich said Voyager was “well-capitalized to weather market cycles and protect client assets.”
But now Voyager admits that as of the beginning of the week, the company had only $152 million in cash and crypto assets on hand, as well as $20 million in cash to buy USDC.
It is worth noting that Sam Bankman-Fried (SBF), the “mom of the currency circle”, has made a high-profile appearance and has already extended a helping hand to Voyager.
Voyager has secured a line of credit worth $200 million in cash and 15,000 bitcoins from Alameda Research, the quantitative research firm of crypto billionaire SBF. The premise is that Voyager does not withdraw more than $75 million in any 30-day period.
Just last month, Three Arrows Capital and Alameda Research participated in a stock raise for Voyager, which raised $58 million. Voyager also said Wednesday that Alameda owns 11 percent of its shares.
According to Voyager’s latest quarterly figures, four counterparties accounted for 79% of its $2 billion loan book at the end of March, with the top two accounting for more than half.
“Currency Central Mother” to turn the tide?
SBF, 29, MIT graduate. Three years ago, he was a young Wall Street trader, and three years later he was a billionaire who founded the FTX crypto exchange. The latest valuation of FTX reached $32 billion, which has surpassed many listed companies in the S&P 500.
Although compared with the traditional financial industry, the key feature of the cryptocurrency market is that it operates independently from the control of the central bank. But when the $900 billion currency circle was in turmoil, SBF played almost the role of “the central mother of the currency circle”.
According to the media, Anatoly Crachilov, fund manager of digital asset hedge fund Nickel Digital Asset Management, said:
SBF becomes the last person who can provide the loan. . . . . . If multiple Lehman events occur together, the crypto winter could last for a long time. FTX’s own balance sheet can support (other companies’) businesses, and it is in their long-term vested interests to let the entire ecosystem survive the cold winter.
SBF once said in an interview that FTX should help its troubled peers in the currency circle:
I do feel a responsibility to seriously consider stepping in, even if we’re going to lose money, to stop the spread.