The Rise and Fall of Voyager Digital
Voyager Digital, once shining bright in the crypto lending sphere, has found itself navigating through the stormy seas of bankruptcy. The chaos began when the contagion initiated by the downfall of Three Arrow Capital (3AC) swept through the crypto landscape, dragging down several firms—including Voyager. The firm, now in the midst of bankruptcy proceedings, has opened a Pandora’s box of financial entanglements, particularly with the notorious Alameda Research.
Alameda Research: From Borrower to Bailout
Alameda Research, a quantitative trading firm led by Sam Bankman-Fried, was more than just a casual lender to Voyager. According to court records, the firm initially borrowed a staggering $370 million from Voyager. But within weeks of 3AC’s collapse, Alameda flipped the script and swooped in with a $500 million bailout proposal to help Voyager weather its financial tempests. Ah, the irony of financial friendships in the crypto world!
Tweets and Tensions
Bankman-Fried took to Twitter with a commentary on the bailout, sparking a battle of love and leverage with Voyager’s legal team. They claimed the CEO was orchestrating a strategy to control the situation, adding more drama to an already complex narrative. “Why haven’t the assets been returned to customers?” he quipped in a now-infamous tweet. His digital musings only added fuel to an already raging fire.
The murky waters of financial ties
Deeper dives into legal documents reveal that the ties between Voyager and Alameda date back to at least September 2021. Voyager’s records show it had lent a whopping $1.6 billion in crypto to an entity in the British Virgin Islands—Alameda’s home turf. Such geographic coincidence seems more like a case of shady operations than mere chance. The intrigue thickens as we discover a debt of $376.784 million owed by “Counterparty A,” which could very well be our villain, Alameda.
Alameda’s Stake in the Chaos
Alameda’s involvement with Voyager wasn’t just strictly about lending and borrowing. The firm held an impressive 11.56% stake in Voyager, thanks to various investments totaling $110 million. But as the seconds ticked away in this crypto crisis, that once-flourishing stake’s value dwindled down to a mere $17 million with the bailout. They even surrendered 4.5 million shares earlier this year to dodge reporting requirements, dropping their equity to 9.49%. Talk about a backhanded retreat!
A Flicker of Hope Amidst Bankruptcy
Despite the turmoil, Voyager’s CEO Stephen Ehrlich remains cautiously optimistic. He asserts that many customers could potentially reclaim a portion of their assets post-bankruptcy. The proposed Plan of Reorganization suggests resurrecting account access and returning some semblance of value to customers, alongside common shares in a newly restructured Voyager. But hold your horses—this plan is still undergoing discussions and requires a green light from the Court.
The Ripple Effect of the Crypto Contagion
The fall of Voyager and its intertwined fates with Alameda and 3AC can’t be divorced from the larger story brewing within the crypto ecosystem. The contagion began with the unfortunate demise of the TerraUSD stablecoin, which sent shockwaves through the once-thriving $40 billion ecosystem of crypto assets. The aftermath saw a string of bankruptcies among leading firms, each leaving its mark on the chaotic crypto landscape. From Celsius to BlockFi, no one was spared, showcasing the unpredictable nature of this digital gold rush.
