Voyager Digital shares plummet 60% after news of potential 3AC loan default

Crypto broker Voyager Digital saw a 60% drop in share price on Wednesday after it reported that embattled crypto hedge fund Three Arrows Capital could default on a $650 million loan.

Canadian company Voyager Digital said it could not assess how much Singapore-based 3AC, which recently faced margin calls from lenders BlockFi and Genesis, will be able to repay. He asked 3AC to pay $25 million in USDC by June 24, 2022, and the balance of USDC and bitcoin by June 27, 2022.

The company has noted that failure to meet either payment deadline will constitute a default and is discussing possible legal remedies with its advisers.

3AC is rumored to be facing insolvency issues

Last Tuesday, 3AC CEO Zhu Su sent out a cryptic tweet seemingly to allay liquidation fears after Twitter user “MoonOverlord” noticed that Zhu and 3AC co-founder Kyle Davies weren’t hadn’t tweeted in days. MoonOverlord also noticed that Zhu deleted his Instagram account and removed all cryptocurrency symbols from his Twitter bio except for bitcoin.

Three Arrows also withdrew 80,000 stETH, an ETH derivative issued by Lido finance for ETH staking, from the DeFi platform AAVE. The company then traded 38,900 stETH for 36,700 ETH. Since the ratio of ETH to stETH is less than one to one, market experts believed this to be a sign of liquidity issues.

Zhu later tweeted that they were “fully committed” to resolving the issues without being specific.

The company got its fingers burned after investing $559.6 million in the algorithmic stablecoin Terra, which crashed along with its sister token Luna in early May. A major crypto selloff did not help matters.

Bankman-Fried extends lifeline to crypto firms on the brink

Crypto lender BlockFi announced on Tuesday that it had signed a term sheet securing a $250 million revolving line of credit with crypto exchange FTX after preemptively liquidating 3AC’s margin loan, whose warranty had fallen below acceptable limits.

Alameda Research, a quantitative trading firm founded by FTX CEO Sam Bankman-Fried, recently loaned Voyager Digital $485 million in cash, USDC and bitcoin. Voyager said he would only use the line of credit if necessary, still holding about $150 million in cash and cryptocurrency and $20 million earmarked for USDC purchases.

Bankman-Fried said he was happy to help stem the contagion currently plaguing the crypto market.

On June 14, Voyager said in a Twitter thread that the company gives priority client funds and refrains from offering DeFi lending, algorithmic stablecoins (potentially a veiled reference to TerraUSD) from staking and lending, and is unrelated to stETH, a crypto token at the heart of the problems of another Celsius lender that suspended withdrawals from its accounts a week and a half ago.

Despite this, Voyager’s most recent announcement raised concerns among analysts at Compass Point Research & Trading that customers could start withdrawing funds en masse, creating a “bank run” scenario.

In March, the New Jersey Bureau of Securities issued a cease and desist order to Voyager, targeting its Voyager Earn product.

Voyager’s stock price is down more than 95% year-to-date at press time.


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