Alameda Research, a quantitative trading firm, has provided a substantial loan to cryptocurrency broker Voyager Digital to help it tide over the current market turmoil. The move suggests financial trouble for the company and has spread fears among users and investors of possible insolvency.
Voyager’s credit line is divided into two parts. It combines cash and Circle’s stablecoin USD Coin (USDC) in an amount of $200 million. On Monday morning, there were around $309 million worth of bitcoin (BTC) in the revolving credit facility for 15,000 bitcoin (BTC).
Each facility expires on Dec. 31, 2024, and carries an annual interest rate of 5% payable on the date of maturity.
“The company pursued this term sheet considering the current crypto market conditions,” Voyager announced in a statement on Friday. It will be used to safeguard customer assets against current market volatility and only in the event it is required, the firm added.
On top of Alameda’s lines of credit, Voyager said its balance sheet is worth over $200 million.
The cryptocurrency market is under significant downward pressure, with bitcoin and ether down 15% and 9% in the last seven days, respectively, according to Blockworks Research. Voyager Digital’s stock is down 91% so far this year and has declined 52% in the past month, according to data from TradingView.
“Today’s actions give Voyager more flexibility to mitigate current market conditions and strengthen our relationship with one of the industry leaders,” Stephen Ehrlich, Voyager’s chief executive, said in a statement.
Companies in the industry including Celsius, Three Arrows Capital and Babel Finance have all recently admitted to facing liquidity crises, but participants in the space believe the contagion isn’t limited to just these names. Voyager’s loan announcement came ahead of speculation that it might be another firm facing insolvency.
Alex Svanevik, chief executive of on-chain data hub Nansen, called on Voyager via Twitter to be transparent about its position.
Voyager told Blockworks the speculation is “unequivocally false.” Alameda didn’t immediately respond to Blockworks’ request for comment.
Before Voyager secured its credit facility, Alameda founder Sam Bankman-Fried told National Public Radio he felt a responsibility to step in and help players stem contagion — even if Alameda were at a loss itself.
“Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive,” Bankman-Fried said. The crypto billionaire stepped down from his role as Alameda’s CEO last October.
Both firms are expected to complete documentation relating to the credit facility in the coming days.
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