Crypto broker Voyager Digital suspends customer trading, deposits, withdrawals and loyalty rewards

07/07/2022 / By Kevin Hughes

Digital asset brokerage Voyager Digital announced in a statement issued Friday, July 1, that it has suspended all customer trading, deposits, withdrawals and loyalty rewards.

Voyager’s move follows that of well-known crypto staking and lending platform Celsius, which likewise halted all withdrawals, swaps and transfers between accounts due to “extreme market conditions” on June 13. Celsius has yet to declare tangible guidance on its next moves.

“This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” said Voyager CEO Stephen Ehrlich.

Ehrlich added that the decision is designed to give the company extra time to continue “exploring strategic alternatives with various interested parties” and that the company will give additional information at “the appropriate time.”

Voyager’s statement comes amid a pile of margin calls and defaults across the sector, making the digital broker the most recent collateral damage of the broad market selloff in cryptocurrency.

Bitcoin and Ether, the two most widely traded cryptocurrencies, are down more than 70 percent from their high point last November, and the crash of the UST stablecoin last May sent shock waves through an already turbulent market.

Voyager customer 3AC defaults on a loan worth $670 million

Just a week ago, news broke out that one of Voyager’s customers has failed to make payments on a loan that is valued at hundreds of millions of dollars.

The broker circulated a notice on June 27 that crypto hedge fund Three Arrows Capital (3AC) has defaulted on a loan worth more than $670 million.

As of June 24, Voyager said it has nearly $137 million and owned crypto assets. The company also mentioned that it has access to a $200 million credit line in cash and USDC stablecoins, including a 15,000 bitcoin ($318 million) revolving credit line from Alameda Ventures, which is a quantitative trading company of FTX founder Sam Bankman-Fried.

Alameda recently dedicated $500 million in funding to Voyager, and the latter has already plucked $75 million from that line of credit.

Meanwhile, crypto markets continue to plunge, adding to a downturn that has cleared some $2 trillion of market value and left market players uneasy.

“I had begun to think that dominoes had stopped falling in mid-June. [But now] I suspect there will be more bad news, although I make no specific predictions,” said Aaron Brown, a crypto investor.

Much of the industry’s recent liquidity issues stem from the troubles at 3AC, which suffered from large losses after making big bullish bets on everything from Bitcoin to Luna.

Established in 2012 by former Credit Suisse traders Zhu Su and Kyle Davies, 3AC has become symbolic of the industry’s surplus during last year’s bull market, when it developed leverage that proved catastrophic when the market turned. (Related: BREAKING: Court orders liquidation of Three Arrows Capital.)

“Crypto is a nascent industry, but intense competition developed amongst service providers vying for the business of a small set of entirely new counterparties,” said Alex Felix, managing partner at CoinFund.

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