It’s been a tough few weeks for customers of Voyager Digital as they have seen the ripple effects of a declining crypto market lead to a huge financial crisis for the company. Though it may seem like Voyager are in trouble, its CEO is adamant that the decision made to suspend customers’ trading, deposits, withdrawals, and loyalty rewards is a move necessary for their survival and future success.
“This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” said Stephen Ehrlich, CEO of lending company Voyager.
Erlich went on to say that the decision is designed to give the firm additional time to continue “exploring strategic alternatives with various interested parties” and that they will provide additional information at “the appropriate time.”
Voyager’s announcement comes amid a raft of margin calls and defaults across the sector, making the digital broker the latest collateral damage of the broad market selloff in cryptocurrency. The two most widely traded cryptocurrencies, bitcoin, and ether, are down more than 70% from their peaks last November, and the May collapse of the UST stablecoin sent shockwaves through an already tumultuous market.
The news comes a few days after one of Voyager’s customers failed to make payments on a loan worth hundreds of millions of dollars, fueling growing concerns of an insolvency contagion effect across the industry.
On Monday, the broker issued a notice that prominent crypto hedge fund Three Arrows Capital (3AC) had defaulted on a loan worth more than $670 million. At the time, Voyager said that it intended to pursue recovery from 3AC, and in the interim, said it would continue to operate and fulfill customer orders and withdrawals.
As of June 24, Voyager said it had approximately $137 million in U.S. dollars and owned crypto assets. The company also noted that it has access to a $200 million credit line in cash and USDC stablecoins, as well as a 15,000 bitcoin ($318 million) revolving credit line from Alameda Ventures, which is FTX founder Sam Bankman-Fried’s quantitative trading firm.
Last week, Alameda committed $500 million in financing to Voyager, and the firm has already pulled $75 million from that line of credit, but it appears that wasn’t enough to keep business running as usual.
Thus far, investors in the world’s two largest cryptocurrencies by market cap seem unfazed by the news. Bitcoin is up about 2% and ethereum is up more than 4% toward the end of regular market hours on Wall Street.
Voyager is a competitor to crypto lending firm BlockFi, which has also been caught in the crosshairs of the sector’s recent liquidity crunch. FTX has just struck a $680 million credit deal to acquire BlockFi.
Voyager’s decision tracks that of popular crypto staking and lending platform, Celsius, which similarly paused all withdrawals, swaps, and transfers between accounts due to “extreme market conditions” on June 13. Celsius has yet to announce tangible guidance on next steps.
How are customers affected specifically by this change?
Other than not being able to use the services mentioned above how will customers be directly affected. Voyager have provided some answers on their announcement and we will share these below:
Can you still use the Voyager App?
- You will still be able to view market data and track your portfolio in the app, you will receive rewards payments for the month of June, and we plan to continue to pay monthly rewards in July.
Why Can’t I use my Voyager Debit Card?
- Debit cards stopped working after the suspension of voyager digitals services, announced on July 1st, 2022. You will need to stop any direct deposits currently going into the account connected to your debit card, as well as any automatic payments made from that account.
How is Voyager digital “exploring strategic alternatives”? Is Voyager up for sale?
- They are in discussions with various parties regarding additional liquidity and the go-forward strategy for the company. While they don’t have anything else to share today, they are working diligently and hope to have more information to share soon.
Will Voyager Digital Go Insolvent/Bankrupt?
See predictions from a crypto expert here.
CoinVoyagers plan to keep updating on this situation as more news unfolds.
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