The crypto currency market has been on a near constant decline for the last three months. Both retail and institutional investors are feeling the full brunt of this price drop. So much so, that the situation is becoming tricky for many crypto platforms and other investment funds. The Voyager Digital exchange has also suffered.
Three Arrow Capital puts Voyager Digital in a bind
Last week, we discussed the plight of investment fund Three Arrow Capital (3AC). This investment fund specialising in crypto-currencies has been hit hard by the fall of crypto-currencies.
The situation gradually deteriorated for Three Arrow Capital, bringing the fund to the brink of insolvency.
Unfortunately, 3AC’s disastrous track record does not stop at the company’s borders. The American exchange platform Voyager Capital is also suffering from the investment giant’s downfall.
In an announcement published on 22 June, Voyager Digital revealed that it had put Three Arrow Capital on notice. This follows a default in the repayment of its loan. In practice, the amount of this loan is 15,250 BTC and 350 million USDC. This represents a total sum of over 660 million dollars.
“Voyager Digital made an initial request for repayment of $25 million in USDC, due on or before 24 June 2022. It subsequently requested repayment of the entire balance of USDC and BTC with a deadline of 27 June 2022. None of these amounts have been repaid, and failure by 3AC to repay any of the amounts demanded by these specific dates will constitute an event of default.”Explains Voyager Digital.
Faced with the uncertainty of a potential refund from 3AC, the company announced that it was exploring all “available legal remedies” to recover the funds.
A critical situation
The failure of Three Arrow Capital to repay its loan has put Voyager Digital in a critical situation. Internet user @MikeBurgersburg revealed that the loan represented a large portion of the company’s funds.
Indeed, on 30 September, Voyager Digital had 25,000 BTC and 384 million USDC. Therefore, the loan taken out by 3AC represents half of the BTC and almost all of the USDC held by Voyager Digital.
Voyager Digital confirms its loan from Alameda
The default on the Three Arrow Capital loan has put a strain on the platform’s liquidity. As a result, the platform had no choice but to turn to other intermediaries to obtain funds and replenish its cash flow.
In the same press release, the platform indicated that it had reached an agreement with the giant Alameda Research. As a result, Alameda Research will provide a $200 million loan in cash and USDC as well as 15,000 BTC to cover the defective loan from Three Arrow Capital.
As a result, Voyager Digital validates the rumour that Alameda would help the company remain solvent.
Read more about : FTX comes to BlockFi’s rescue with an initial $250M loan.
In addition, Voyager Digital used the announcement to take stock of its holdings of $152m in crypto cash and $20m in fiat, “earmarked for the purchase of USDC”.
Of course, the loan granted is not without conditions:
A maximum of US$75 million can be drawn down over a 30-day period. The company's debt must be limited to approximately 25% of the clients' assets on the platform, or less than US$500 million. Additional sources of funding must be secured within 12 months.
It would appear that this loan has been granted, as Alameda Research owns 22,681,260 common shares of Voyager Digital, or 11.56% of all outstanding shares.
Alameda Research continues to position itself as the saviour of companies in the crypto ecosystem. This one may well continue to make news, bailing out other companies on the verge of insolvency.