Voyager Digital’s share price spiked after revealing a loan of nearly $700 million from Three Arrows Capital while the fund was falling into “default”.
Voyager Digital stock price dumped strongly
Toronto-based digital asset brokerage Voyager Digital has become the latest crypto firm to face solvency issues due to the recent crypto crash. On June 22, the company requested repayment of a loan from its troubled monopoly business Three Arrows Capital (3AC), announcing that it “may issue notice of default”.
On the evening of June 22, Voyager Digital announced that they are lending Three Arrows Capital $662 million including 15,250 BTC (worth about 312 million USD at the time of update) and 350 million USDC. The repayment period for the above two loans is June 24 and June 27.
Voyager’s share price fell more than 53.38% following the news.
Voyager initially requested a refund of US$25 million from the Singapore-based hedge fund on June 24 before later demanding a full refund of USDC and BTC balances on June 27, it’s not sure what to expect.
“The company cannot assess at this time how much money it will be able to recover from 3AC,”Voyager said in a press release.
The fact that Voyager Digital is in this situation comes from the need to generate profits to compensate users for depositing money on the platform. While it is primarily known as an exchange where users can trade different types of tokens, Voyager also pays users interest rates as high as 9%. Naturally, the company would need to generate returns in excess of these amounts to generate those profits.
Today’s announcement represents an escalation in the company’s battle to gain a solid financial footing amid market turmoil. The exchange was able to secure a revolving line of credit from Alameda Ventures, a quantitative trading firm founded by billionaire FTX CEO Sam Bankman-Fried.
In fact, Bankman-Fried became a lender of last resort this past week, when FTX agreed to provide BlockFi with $250 million in revolving credit after the company said it would lay off about 20% staff. Bankman-Fried has positioned itself as a crypto savior for struggling companies.
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