Digital asset brokerage firm Voyager Digital has halted all customer trading, deposits, withdrawals, and loyalty awards, according to a statement issued by the company.
“This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” said Stephen Ehrlich, CEO of lending company Voyager.
Erlich went on to explain that the move is intended to give the firm more time to continue “exploring strategic possibilities with various interested parties,” and that further information will be provided “at the appropriate time.”
Voyager’s news comes amid a slew of margin calls and defaults throughout the industry, making the digital broker the latest casualty of the broader cryptocurrency market selloff. Bitcoin and ether, the two most popularly traded cryptocurrencies, are down more than 70 per cent from their high last November, and the May collapse of the UST stablecoin sent shockwaves through an already volatile market.
The announcement comes just days after one of Voyager’s customers failed to make payments on a debt worth hundreds of millions of dollars, sparking mounting fears of an industry-wide insolvency.
The broker announced on Monday that Three Arrows Capital (3AC), a famous crypto hedge fund, had defaulted on a credit worth more than $670 million. Voyager stated at the time that it intended to pursue recovery from 3AC and that, in the meanwhile, it would continue to operate and fulfil customer purchases and withdrawals.
As of June 24, Voyager reported having around $137 million in US currency and crypto assets.
The company also stated that it had access to a $200 million credit line in cash and USDC stablecoins, as well as a 15,000 bitcoin ($318 million) revolving credit line from Alameda Ventures, the quantitative trading firm of FTX founder Sam Bankman-Fried.
Alameda committed $500 million in finance to Voyager last week, and the company has already drawn $75 million from that line of credit, but it appears it was insufficient to keep business going as usual.
So far, investors in the world’s two largest cryptocurrencies by market capitalization appear unconcerned by the news. Bitcoin is up about 2 per cent, while Ethereum is up more than 4%, as regular market hours on Wall Street come to a conclusion.
Voyager competes with crypto loan startup BlockFi, which has also been impacted by the sector’s recent liquidity crisis. According to The Block, FTX has just signed a $680 million credit agreement to acquire BlockFi.
Voyager’s move mirrors that of Celsius, a prominent crypto staking and lending site, which similarly halted all withdrawals, swaps, and transfers between accounts on June 13 owing to “extreme market conditions.” Celsius has yet to provide concrete direction on the next steps.
(Adapted from Investing.com)