Traveling Digital Files For Bankruptcy – Bitcoin Magazine

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Early on July 6, 2022, it was announced that Voyager had filed for Chapter 11 bankruptcy.

Voyager Digital begins a process of financial restructuring to maximize value for all stakeholders

This followed the firm announcement on June 22 that they had significant exposure to Three Arrows Capital (3AC) in the form of unsecured loans.

“Voyager concurrently announced that its operating subsidiary, Voyager Digital, LLC, may issue a notice of default to Three Arrows Capital (“3AC”) for default on its loan. Voyager’s exposure to 3AC consists of 15,250 BTC and $350 million USDC The Company made an initial refund request of $25 million USDC by June 24, 2022, then requested a refund of the entire balance of USDC and BTC by June 27, 2022. None of these amounts have been repaid and 3AC’s failure to repay any of the requested amounts by these specified dates will constitute an event of default.” – Voyager press release

In our June 16 release, following the reported insolvency of 3AC, we speculated on the likelihood of Voyager exposure to 3AC in our issue, Fears of a new contagion.

“With recent developments, rumors have been circulating, with speculation that several crypto lending/borrowing bureaus have been hit by insolvency.

“While it is uncertain which companies have suffered balance sheet impairments, there is a large possibility of losses across all companies in the sector, and it is likely that we have not seen the dust settle.

“Shares of crypto custodial/borrower firm Invest Voyager ($VOYG) have fallen 33% in the past two days. The company’s latest quarterly publication showed that the company had loaned $320 million to a Singapore-based entity (3AC headquarters before the relocation). Whether the loan went to 3AC or not, the share price crash is certainly not a market vote of confidence for a US-based public crypto lending platform. – Fears of a new contagion

Now, with the announcement of Voyager’s bankruptcy proceedings, some interesting findings can be seen in the bankruptcy filings.

In the company depositit was reported that Alameda Research had borrowed $376 million from Voyager, for unknown reasons.

While it’s somewhat curious that the company is supposedly trying to consolidate the industry and stem balance sheet contagion, it’s currently borrowing money from an insolvent company (of which Alameda has a 9. 49%), there are a few reasons that come to mind.

  1. It is not uncommon for a proprietary trading desk to borrow capital in the cryptocurrency industry (specifically denominated in non-dollar assets).
  2. Since Voyager’s assets (which were largely customer deposits) were partially denominated in bitcoin, Alameda could potentially borrow BTC to use for market making/shorting, in which they would aim to hedge the loan at a later date.
  3. Although the terms of the loan are not specified, given Alameda’s stake in Voyager, it would make sense for the company not to call on the loan, which would reduce expected interest income.

We are confident that it will take the market either lower prices and/or considerable time to recover from the damage suffered over the past few months, both from a balance sheet impairment and reputational perspective. /legitimacy.

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