Clearly, Voyager is out of the digital jungle. The company ran into liquidity issues when Three Arrows Capital failed to give them a major loan. Welcome to another chapter of the Crypto Death Spiral due to the fall of Terra/Luna. Who came to the rescue this time? Sam Bankman-Fried’s second company, Alameda Ventures. Is this guy pushing crypto out or is he taking full control of the industry?
one in Recent Press ReleasesVoyager Digital announced that it has entered into a “definitive agreement with Alameda Ventures Ltd., relating to the previously mentioned credit facility, with the aim of helping Voyager meet the liquidity needs of customers during this dynamic period.” This is one way to put it. The company “received $200 million in cash and a USDC revolver and a 15,000 BTC revolver.”
This morning, we announced a definitive agreement with Alameda Ventures for a $200 million dollar cash/USDC revolver and 15,000 BTC revolver.
Read today’s release: https://t.co/8wPfzcaI6K
— Voyager (@investvoyager) 22 June 2022
As a reminder, it was revealed yesterday that FTX, which is also owned by Banksman-Fried raised $250M . Bailed to BlockFi with, At the time, we described the situation as follows:
“Over the past few weeks, the crypto market has slumped. The contagious impact of the Terra/Luna extinction event shook every company, most of which saw cryptocurrency deposits like BlockFi and Celsius and yields on hedge funds like Three Arrows Capital. In turn, the problems faced by these companies and the potential liquidation of assets put the cryptocurrency market in even more turmoil.”
The Voyager case fits right into that description.
Sam Bankman-Fried’s loan to Voyager, terms
Rumors were already flying. On June 16, analyst Dylan LeClair tweeted, “Speculation here, but in its quarterly report, Voyager gave a $320 million loan to a Singapore-based entity called “Counterparty B”. One has to wonder if “Counterparty B” “Was 3AC and if so, how many hits did Voyager take?” The answer came faster than anyone could have imagined.
There is speculation here, but in its quarterly report, Voyager gave a $320 million loan to a Singapore-based entity called “Counterparty B”.
— Dylan LeClair (@DylanLeClair_) 16 June 2022
In the press release, Voyager explained the loan:
“As disclosed earlier, the proceeds of the credit facility are used to safeguard the assets of the clients in light of the prevailing market volatility and only when such use is required. In addition to this facility, As of June 20, 2022, Voyager has approximately US$152 million in cash and proprietary crypto assets, as well as approximately US$20 million in cash restricted to purchases of USDC.”
The loan comes with “certain conditions” among them:
- “No more than US$75 million may be withdrawn in any rolling 30-day period.”
- “The Company’s corporate lending must be limited to approximately 25 percent of the client assets on the Platform, at least US$500 million.”
- “Additional sources of funding must be secured within 12 months.”
Voyager Digital price chart on OTC | Source: TradingView.com
It’s All About Three Arrows Capital Right Now
The press release confirms the rumours, the Singapore-based entity named “Counterparty B” was 3AC. “Voyager concurrently announced that its operating subsidiary, Voyager Digital, LLC, may issue a notice of default to Three Arrows Capital (“3AC”) for failure to repay its debt. In a recent article, our sister site Bitcoinist breaks down hedge fund position,
“The crypto fund was directly in the crosshairs of the Luna crash with a risk of over $200 million and was estimated to be as high as $450 million. At first, the firm appeared to be bouncing back from the Luna collapse, but it was soon Only then will it become clear that 3AC was in a more dangerous position than investors thought.”
Voyager’s position makes this even more clear. The company’s “exposure to 3AC includes 15,250 BTC and $350 million USDC”. So, the Alameda loan covers most of it. However, what did they have to give in return? Formally, “Alameda currently holds 22,681,260 common shares of Voyager indirectly (“common shares”), representing approximately 11.56% of the outstanding common and convertible voting shares. There is nothing to worry about. But, what if it doesn’t happen?
Voyager leveraged 3AC with its customers’ 650 million paise, leaving them with only 150 million cash reserve.
Merrill Lynch, who’s in charge of the risk over there?
— Tyler (@ApeDurden) 22 June 2022
In any case, for those who like gossip, here’s the story as narrated by Voyager:
“The Company made an initial request for repayment of $25 million USDC by June 24, 2022, and subsequently requested repayment of the entire balance of USDC and BTC by June 27, 2022. None of these amounts were paid and the failure by 3AC to repay any requested amount by these specified dates will be the event of default. Voyager intends to recover from 3AC and is in discussion with the Company’s advisors regarding available legal remedies. “
Answer and Conclusion
The crypto industry as a whole is in a precarious position. And at the heart of this is the question, is Sam Bankman-Fried controlling the chaos or is he taking full control of the industry?
Featured Image by Sebastian Herrmann on Unsplash | Charts by TradingView