6th July 2022 > > Voyager Digital.

tl;dr

Voyager Digital follows Three Arrows Capital into bankruptcy.

Market Snap (at time of writing)

Market Wrap

10-year yields retracing at quite a rate reflecting market’s fears for the short-term health of the economy. BTC just about maintaining the 2-handle perhaps reflecting most rational peoples’ desires to trade contrarian to CNBC’s Jim Cramer who said yesterday that “crypto has no real value”.

Curious Cryptos’ Commentary – And now its Voyager Digital’s turn

On the 2nd July 2022, as part of the ongoing fall-out from the Terra fiasco, the CCC reported that Three Arrows Capital (3AC) had filed for bankruptcy and consequently Voyager Capital had suspended all withdrawals.

3AC owed $500mm equivalent in BTC and USDC to Voyager, for which Voyager had issued a notice of default to 3AC.

At about the same time, Voyager borrowed $500mm from trading firm Alameda Research, presumably in the expectation that this would plug the hole to allow Voyager to continue its operations. The loan documentation was executed on or about 18th June 2022.

Seemingly inevitably, Voyager has now filed for bankruptcy in New York. CEO Stephen Ehrlich had this to say via Twitter:

“As part of this process, the proposed Plan of Reorganization would resume account access and return value to customers. Under this Plan, which is subject to change given ongoing discussions with other parties, and requires Court approval:

Customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common shares in the newly reorganized Company, and Voyager tokens.”

Proceeds from the 3AC recovery will be distributed in 5 years or so, determining an accurate valuation of the new company won’t be possible for quite some time, and Voyager tokens are simply a gimmick, trying to replicate a decentralised approach to a centralised operation. They can be considered worthless.

The only remaining question is what proportion of users’ cryptos held at Voyager will be released, and again, that is a question that is unlikely to be answered any time soon.

Stephen also made the strange, and blatantly untrue claim that “Voyager will continue operating throughout”.

Er, no it isn’t.

And what of the loan from Alameda? If the funds had been drawn down, which seems likely to me, then 3 weeks for a half a yard loan to go bad is quick work. That trade must rank high in the list of all time worst trading decisions.