The flood of bad news and insights in this correction cycle just keep coming.
Exchanges are still operating a the decline in confidence is increasing, especially when the possibility of default from venture capital funds is close to reality.
Voyager Digital May Issue Statement
Cryptocurrency broker Voyager Digital (VOYG) said on Wednesday that it may send a “notice of default” to Three Arrows Capital (3AC) if 3AC fails to repay the loan by June 27.
The official statement came amid the 3AC crisis, indicating that Voyager Digital has been going through some financial difficulties and has lately received support from Alameda Research.
Voyager Digital has made the announcement that it has taken out a loan from Alameda Research for the amount of 15,000 BTC in order to cover the expenses that were incurred as a result of losses related to the venture capital business Three Arrows Capital.
According to the press release, in the event that 3AC is unable to meet the subsequent repayments, it is quite possible that Voyager will be required to notify that this investment fund has defaulted.
Currently, 3AC owes Voyager 15,250 BTC and 350 million USDC.
The repayment notices have been sent to the 3AC hedge fund but it seems that due to the downward trend in the market and the collapse of the majority of the investments, the 3AC hedge fund is having a difficult time and is unable to manage the requested repayment.
3AC Looks Rough
This coming Friday, 3AC is liable for sending a payment of $25 million to Voyager; the remaining sum must be paid in full the following Monday. It would be considered a default event for 3AC if they were unable to fulfill their financial obligations.
Voyager is rushing to complete legal paperwork to pursue recovery from 3AC’s remaining assets should the worst case happen. Voyager also said that it is currently not possible to calculate the number of assets recoverable from this investment fund.
If 3AC defaults, the market could most certainly enter a prolonged recession, and a number of other funds tied to 3AC will also be adversely affected, causing a remarkably negative contagion effect.
According to Voyager, “the Company is unable to assess at this point the amount it will be able to recover from 3AC.”
Since mid-June, several rumors have surfaced stating that Three Arrows Capital (3AC), one of the largest venture capital funds in the cryptocurrency market, is experiencing financial difficulties and is on the verge of defaulting.
Rumors got more serious as the company’s partners and counterparties confirmed the severe problem that the company was facing.
Counterparties have attempted to get in touch with 3AC to request collateral, but they have not received any response to their inquiries.
The Chief Executive Officer of 8 Blocks Capital, Danny Yuan, has issued a warning to all platforms that are holding funds owned by 3AC to immediately freeze their assets.
Because of this, a number of platforms were forced to liquidate 3AC’s positions, which made the situation for the fund even more difficult.
TradingView data indicates that shortly after the news broke, the value of Voyager shares dropped by more than sixty percent.
In place of the previous daily withdrawal restriction of $25,000, the company has stated today that the limit will now be set at $10,000 per day, with a maximum of 20 withdrawals allowed each day.
Alameda Research, backed by Sam Bankman-Fried – CEO of FTX, has lent Voyager Digital $485 million, including fiat and Bitcoin to keep Voyager afloat.
After Voyager, Sam resumed his efforts to save another troubled cryptocurrency lender, BlockFi, with a loan of $250 million.
Before it could be saved, BlockFi revealed that it had to liquidate the loan collateral of a key customer since it failed to meet its obligations and secure its finances.
Although the customer was not identified in the announcement, widespread speculation believed that it was Three Arrows Capital.