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Following a Pause in Withdrawals, Voyager Seeks “Strategic Alternatives”

In an effort to buy more time, Voyager claimed it had stopped withdrawals, trading, deposits, and loyalty awards on its platform. The insolvency of Three Arrows Capital has caused liquidity issues for the crypto lender.

Voyager, a crypto lender, is the most recent company to be affected by market contagion brought on by Three Arrows Capital’s (3AC) failure, which has caused liquidity difficulties throughout the entire digital asset sector.

Voyager informed users via email on Friday that it had decided to halt trading, deposits, withdrawals, and loyalty programs on its platform in an effort to buy some time while looking for “strategic options.”

Voyager’s recent announcement from last week, in which it indicated it will keep running and fulfill customer orders and withdrawals, has been reversed.

The Jersey City corporation claimed to hold more than $650 million in claims against 3AC in addition to about $1.3 billion in crypto assets on its platform in a string of tweets on Saturday. In addition, Voyager claimed to have more than $350 million in cash on hand at the Metropolitan Commercial Bank of New York.

The bank stated:

“[Federal Deposit Insurance Corporation] insurance does not protect against the failure of Voyager, any act or omission of Voyager or its employees, or the loss in value of cryptocurrency or other assets. The standard FDIC insurance coverage amount is currently $250,000 per depositor for each account.”

The news that 3AC entered liquidation last week as a result of a British Virgin Islands court decision has only made the unfavorable market conditions that many businesses are already struggling with worse.

According to the law firm representing 3AC in New York, the Singapore-based hedge fund company filed for Chapter 15 bankruptcy on Friday despite the fact that founders Kyle Davies and Zhu Su are missing.

Following a stop in withdrawals last month, Hong Kong-based cryptocurrency lender Babel Finance has now engaged US investment bank Houlihan Lokey, raising the possibility that it could be the next domino to enter insolvency or default.

The Domino Effect

Another large platform that offers yield on deposits, Celsius, is defying counsel’s advice to file for Chapter 11 bankruptcy in order to deal with its own problems after a withdrawal freeze on June 12.

Voyager enables customers to trade and receive a yield on crypto assets of up to 12%, similar to other lenders in the sector.

Voyager stated on Saturday that it was “working swiftly” to restore services and will issue an update “as soon as it becomes available” despite not providing a specific timeframe for when the restrictions would be lifted.

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