Voyager issues notice to Three Arrows Capital defaulting on loan.
Voyager, a publicly-traded crypto platform founded in 2018, allows investors to trade more than 100 cryptoassets and earn up to 12% yield on various tokens but has recently ran into major liquidity issues between 3AC and cryptocurrency lender Celsius.
According to the press release, Voyager is owed 15,250 Bitcoin (approximately $325 million at the current price) and $350 million USDC. The firm said it would pursue legal action to recover the funds.
“Voyager intends to pursue recovery from 3AC and is in discussions with the Company’s advisors as to legal remedies available.”
As of June 24, 2022, Voyager had approximately $137 million in cash and owned cryptoassets on hand, the statement said.
On June 22, Voyager implemented a $10,000 user withdrawal limit in response to the unfolding crypto deleveraging event while continuing to operate and fulfill customer orders and withdrawals, and its liquidity levels remain healthy, the company added.
“Voyager Digital Holdings, Inc. (“VDH”), has entered into a definitive agreement with Alameda Ventures Ltd. (“Alameda”) related to the previously disclosed credit facility, which is intended to help Voyager meet customer liquidity needs during this dynamic period.
Alameda imposed several conditions on the bailout, such as the firm securing additional funding within 12 months. But chief among them was a $75 million drawdown limit over any 30-day rolling period.
Voyager is also looking into other ways to protect there customers assets and balance sheets.
“At the end of the day, what market participants should take away is that risk management is one of, if not the most, critical aspects of the crypto lending space,” Bill Barhydt, CEO of Abra, said. “It has been an issue in this space for years, and now we are seeing it first-hand with multi-billion dollar enterprises.”
“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” Voyager CEO Stephen Ehrlich said in a statement Monday.
Making it a much bigger conversation now in the future with funds and other lending platforms really coming under the microscope with the scale of these breakdowns of major cryptocurrency companies.
In a recent tweet, 8Blocks Capital CEO Danny Yuan made similar claims, saying 3AC had ghosted him giving a grim outlook from the beginning on how the situation was handled.
1) What happened between 3AC and us and what we know so far: @zhusu @KyleLDavies
2) From Nov 2020, we entered into an agreement with 3AC in which we would pay them a fee to use their trading accounts.
3) As a delta neutral market maker in the crypto markets, we are very sensitive to trading fees. When you are trading 9 figures USD per day, even 1 bip on 100,000,000 is $10,000. If you are doing that every day, it adds up to a lot very quickly.
4) So our agreement with them was: we withdraw whenever we want. 100% of the PNL belongs to us. They are never to move our funds without permission (increases the risk of our positions getting liquidated) and in return, we pay them fees for their service.
5) This was a mutually beneficial relationship for over 1.5 years. We had known them since 2018, thought they were competent and didn’t think they were degen enough to lose billions and not employ basic risk management.
6) On June 12th, with the market dropping and needing some funds from the account for positions on other exchanges, we asked for a withdrawal from the Ops team which was honored.
7) On June 13th, with the continuation of the drop, we asked for a bigger withdrawal. There was no reply but we didn't think much of it at the time. After a while, the market stablized so we no longer needed the funds. We thought maybe they were just busy.
8) Fast forward to 24 hours ago, our funds monitoring script noticed that ~1m was missing from our accounts with them. We reached out to @KyleLDavies , the Ops team on Telegram about the missing funds- no replies. We tried calling them- they were online and they didn't pick up.
9) Then our traders noticed that there were a few rumors circulating on Twitter speculating on 3AC’s insolvency. Since we were directly involved, we felt the need to tell the world about what had occurred and gauge the extent of the 3AC contagion.
10) A lot of people have reached out about what they know- many of whom have direct relationships with 3AC as well.
11) What we learned is that they were leveraged long everywhere and were getting margin-called. Instead of answering the margin calls, they ghosted everyone. The platforms had no choice but to liquidate their positions, causing the markets to further dump.
12) However they still have assets on a number of platforms (you know who you are). We call for you to freeze their assets so that those who 3AC owes can be paid back in the future after legal proceedings.
13) FWIW, for the most part, they aren't speculating with clients' money like Celsius was (maybe a thread another day about our dealings with them in 2019), however, here they did use our funds (~1m USD) to answer their margin calls.
14) Losing a bet is one thing, but at least be honorable and not drag others into your bets who have nothing to do with it. Certainly don’t ghost on everyone since potentially, they could’ve helped you.
@Danny8BC https://www.8blocks.capital/
