Major crypto broker Voyager Digital, announced on July 1, 2022, that it had suspended operation on its platform. According to the announcement, all trading, deposits, withdrawals, and loyalty rewards were suspended starting from July 1, 2022, at 2 PM Eastern Daylight Time.
Why They Shut Down
Voyager Digital revealed that the decision to shut down operations had been “tremendously difficult.” According to the platform, they came to the decision due to current market conditions, according to CEO Stephen Ehrlich. The CEO added that the suspension of activities would give them additional time to continue to explore alternatives with various parties while they preserved the value of the platform. The announcement stated that they would provide more information later.
Previously, Voyager had announced that Voyager Digital LLC had issued a notice of default to Three Arrows Capital after it failed to make scheduled payments on its loan of 15,250 BTC, and 350 million USDC. The broker is currently looking into remedies for recovery from 3AC; including via a court-ordered liquidation process in the British Virgin Islands.
As part of its attempt to find solutions to its current predicament, Voyager Digital has hired The Consello Group and Moelis & Company as financial advisors. It has also retained Kirkland & Ellis LLP for legal advice.
How Has the Suspension Affected Users of Voyager Digital?
The Voyager Digital app is still working. Users can still use it to view market data and track their portfolios. Additionally, users can still receive rewards payments for June. The platform plans to continue paying monthly rewards in July.
The Voyager debit card will not be affected by the suspension. Holders of the debit card have been asked to stop any direct deposits into the account connected to the card. Additionally, users have been asked to stop any automatic payments made from the connected Voyager account.
What Does This Mean for the Future of Voyager?
Voyager Capital has blamed three Arrows Capital (3AC) for causing the current crisis. According to them, 3Ac’s default on scheduled repayments for a loan of around $646 million by current crypto prices is the main cause of this crisis. It does not appear that 3AC intends to make any repayments on the loan.
While they did not outright state so, in the announcement, they hinted that Voyager Digital might be up for sale. They stated that they would be holding discussions for additional liquidity, which would most likely be given in exchange for a huge chunk of the company.
How Much Does Voyager Owe Customers
In an announcement regarding the suspension of operation, Voyager provided financial details, and balance sheet updates in line with the Canadian Securities laws. According to the details, Voyager currently holds $355,725,000 in customers’ assets. It also revealed that it had loaned out crypto assets valued at over $1.1 billion, which consists of over 21 thousand BTC, over 401 million USDC, over 170 thousand ETH, and other crypto coins collectively valued at over $106 million.
The Collapse of the Crypto Lending Industry
Since the current crypto bear run began, the crypto lending industry has borne the brunt of it. Celsius, a leading crypto lending and staking platform also announced it was suspending most of its operation on June 13 due to “extreme market conditions.” The platform has not yet given its community an update on its future.
