[UPDATED] Crypto Contagion Spreads as Voyager Digital Reveals US$665M 3AC Exposure
Voyager Digital has issued a notice of default to 3AC for failing to make payments on a loan worth over US$665 million due on Monday.
“We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands,” said Voyager chief executive Stephen Ehrlich in an announcement.
Shares in crypto platform Voyager Digital (NYSE:VOYG) have plummeted over 60% after revealing it was exposed to Three Arrows Capital (3AC) by as much as US$665 million.
On Wednesday, the brokerage stated its exposure to 3AC includes 15,250 bitcoin (US$315 million) and US$350 million worth of USDC.
Voyager further added that it “may issue a notice of default to 3AC for failure to repay its loan.” Repayment includes US$25 million to be paid on Friday with the total balance due on Monday. If 3AC fails to pay, it will be considered a default.
3AC has been facing trouble following LUNA’s collapse last month when the value of its position in the stablecoin fell from US$559.6 million to US$670. The crypto hedgefund was also the largest holder Grayscales Bitcoin ETF, which recently hit its all time low.
3AC Backs Terra Luna— The DeFi Edge 🗡️ (@thedefiedge) June 16, 2022
Before the Terra collapse last month, 3AC spent $559.6 million to buy Locked Luna.
It’s now worth roughly ~$670.
There is SPECULATION that the massive losses of Luna caused them to use more leverage to earn it back.
Also known as “Revenge trading”
Voyager is working wtih the company’s lawyers in the hope to pursue legal action to recover its funds form 3AC.
In an effort to limit contagion, Alameda Research – a trading firm managed by FTX CEO Samuel Bankman-Fried – has lent Voyager US$500 million to help the broker recover its losses. The loan comprises US$200 million in cash and 15,000 BTC.
Earlier this month, Bankman-Fried said Alameda and FTX are working to prevent contagion in the crypto market. “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,” he said.
The FTX CEO also bailed out BlockFi with a US$250 million revolving credit facility to help them “navigate the market from a position of strength.” 3AC had been liquidated by BlockFi and after it failed to top up its loan collateral.