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Voyager Digital, a cryptocurrency brokerage firm, announced last Friday that it has suspended all customer trading, deposits, withdrawals and loyalty rewards.
“This was a tremendously difficult decision, but we believe it is the right one given current market conditions. 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,” said Stephen Ehrlich, CEO of lending firm Voyager Digital.
Voyager has been facing financial challenges that have adversely affected its operations. On June 22, the lending firm revealed that it had huge exposure to the crypto hedge fund firm Three Arrows Capital (3AC). Last week, Voyager issued a notice of default to the struggling crypto hedge fund for failure to repay its loans.
The loans totalled about $665 million, consisting of 15,250 BTC ($294 million) and $350 million in USDC. Voyager said that it had requested Three Arrows Capital to repay $25 million in USDC by June 24, and repay the entire balance of USDC and BTC by June 27.
Since 3AC defaulted, Voyager recently disclosed plans to pursue all means to recover its funds from the crypto hedge fund firm, including through a court-ordered liquidation process in the British Virgin Islands.
Voyager recently secured over $500 million loans in form of $200 million in USDC and $294 million worth 15,000 BTC from Alameda Research, a quantitative trading firm owned by FTX boss Sam Bankman-Fried, to mitigate its $665 million exposure and weather the crypto winter.
So far, Voyager has received access to the $75 million part of the FTX loan, but it seems that was not enough to keep its business operating as usual. The firm looks forward to accessing more funds whenever available.
The Fragile Crypto Market
The ongoing crash of cryptocurrencies has left several market players in the industry facing financial difficulties.
Bitcoin and altcoins have plunged hard as the market experiences new realities triggered by interest rate hikes by the Federal Reserve and the collapse of TerraUSD stablecoin and its sister cryptocurrency Luna.
On June 12, crypto lender Celsius suspended all account withdrawals, citing “extreme market conditions.” Reports showed that Celsius invested hundreds of millions of dollars in the illiquid token derivative called Staked ether, or stETH, another controversial cryptocurrency that caused damage in the digital asset market, after the fall of TerraUSD.
A prominent crypto lending firm BlockFi also has been facing financial struggles as it had significant exposure to Three Arrows Capital. The crypto lender recently announced massive job cuts and its valuation dramatically reduced from $5 billion to $1 billion. Last week, BlockFi secured a $250 million revolving line of credit from FTX to bail out its business.
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