Voyager CEO Stephen Ehrlich wrote on Twitter that he expected that Voyager would "emerge as a stronger company", certainly an optimistic prediction for a crypto broker that froze customer funds with no promise they will ever be able to access them, then filed for bankruptcy.
Voyager Digital files for bankruptcy
Voyager Digital, a crypto broker that suspended withdrawals a week prior, announced that it had filed for bankruptcy. They attributed their decision to "prolonged volatility and contagion in the crypto markets", as well as their exposure to Three Arrows Capital, an also-bankrupt crypto fund that defaulted on a loan from Voyager worth around $660 million.
Crypto lender Vauld suspends withdrawals, considers restructuring
Vauld, a major cryptocurrency lender backed by the likes of Coinbase and Peter Thiel, announced they have suspended withdrawals, trading, and deposits due to the crypto market downturn, "financial difficulties of our key business partners", and a recent bank run of customer withdrawals approaching $200 million.
Vauld, which is based in Singapore, also announced that they would be bringing on financial and legal advisors to "explore and analyse all possible options, including potential restructuring options".
- "Corporate statement" by Vauld
- "Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals", Wall Street Journal
Voyager Digital suspends withdrawals and other activity
Voyager Digital announced that they had suspended trading, deposits, withdrawals, and loyalty rewards. This came after it was revealed that Voyager had issued a notice of default to the bankrupt Three Arrows Capital on a loan of more than $670 million worth of USDC and Bitcoin. On June 22, Voyager had reduced their withdrawal limit, suggesting they were having trouble meeting customer demand for withdrawals. The week before that, Voyager had secured a large loan from FTX to try to help them stay afloat.
Voyager announced that they were making the decision "given current market conditions", and that it "gives us additional time to continue exploring strategic alternatives with various interested parties". They also released some financial and balance sheet updates that painted a pretty grim picture.
- "Voyager Digital Provides Market Update", press release from Voyager
FTX reportedly approaches a deal to buy BlockFi in "fire sale"
According to CNBC, the cryptocurrency exchange FTX is hammering out the details on an agreement to acquire crypto lending platform BlockFi. Earlier in June, it was reported that FTX had agreed to lend BlockFi $250 million, bailing out the exchange after it suffered substantial losses.
BlockFi was last valued at $4.8 billion, but FTX is expected to pay around $25 million to buy the company. BlockFi CEO Zac Prince refuted what he described as a "market rumor": "I can 100% confirm that we aren't being sold for $25M." A leaked call with Morgan Creek Digital investors suggested they were trying to counter FTX's offer, and that BlockFi was being valued at less than $500 million. The call also revealed that BlockFi's loan to Three Arrows Capital had been $1 billion, and that it was backed by collateral of $1.33 billion in Bitcoin and GBTC.
CNBC reported that, according to one of their sources, "equity investors in BlockFi are 'wiped out' and are now writing off the value of their losses."
Three Arrows Capital ordered to liquidate
A court in the British Virgin Islands ordered the liquidation of Three Arrows Capital, a crypto hedge fund. This follows initial rumors in mid-June that the firm was insolvent, then a report shortly after that the group was looking at options including asset selloff or a buyout.
The court action followed lawsuits from several creditors over its failure to pay debts. Those creditors included Voyager Digital, who reduced their platform's withdrawal limit after reporting their exposure to 3AC, as well as the crypto exchange Deribit.
- "Crypto Hedge Fund Three Arrows Ordered by Court to Liquidate", Wall Street Journal
Invictus Capital suspends withdrawals
Invictus Capital, the group operating several cryptos in the Cayman Islands and the British Virgin Islands, announced to investors that it would be suspending redemptions. The company cited exposure to both Terra and the Celsius project, both of which have gone under in recent months. According to the announcement, the group is pursuing restructuring. The group claimed to have over $135 million under management.
Vauld lays off 30% of workforce and slashes executive pay
The Peter Thiel- and Coinbase-backed Vauld cryptocurrency exchange laid off 30% of its 100–200 employees, reportedly due to falling prices, low trading volumes, and tax concerns. They also halved executive salaries and drew back on their marketing expenses and vendor contracts.
Almost a year earlier, in June 2021, Vauld raised $25 million in a Series A round led by Peter Thiel's Valar Ventures, which was also joined by Coinbase and Pantera Capital.
Sam Bankman-Fried performs second bailout, loaning $250 million to BlockFi
Crypto exchange FTX loaned $250 million to BlockFi, a crypto lending platform that recently announced 20% layoffs as they struggled to weather the crypto downturn. BlockFi also had loaned funds to Three Arrows Capital, an insolvent crypto hedge fund, although they claim to have successfully liquidated 3AC's positions.
The FTX loan represents the second bailout of a crypto firm by Sam Bankman-Fried's companies, after his Alameda Research trading firm extended credit equivalent to around $485 million to floundering crypto platform Voyager.
- "Crypto exchange FTX bails out lending platform BlockFi", Financial Times
Three Arrows Capital looks for a bailout
The Wall Street Journal reported that Three Arrows Capital, a crypto hedge fund that was rumored to be insolvent several days earlier, was indeed pursuing last-ditch options to make good on their debts. 3AC had major exposure to Luna, a token that plunged in value during the collapse of the Terra ecosystem in May, and lost around $200 million in that catastrophe. The collapse of other projects and the plummeting prices of cryptocurrencies in general exacerbated 3AC's situation, causing them to take losses in other risky plays they had made, and ending with them unable to pay off debts to creditors.
According to the WSJ, 3AC has hired legal and financial advisors to pursue solutions including asset selloffs or rescue by another firm, and is trying to extend the deadlines for outstanding debt repayments.
- "Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout", Wall Street Journal
Babel Finance suspends withdrawals and redemptions
Babel Finance is the latest crypto finance platform to suddenly limit customer withdrawals. Citing "unusual liquidity pressures" and "conductive risk events" to crypto institutions, Babel announced that they would be "temporarily suspending" redemptions and withdrawals for an indeterminate period. Babel Finance had just completed a $80 million Series B round, with a valuation of $2 billion, in May.
Some in the crypto space have been encouraging people to withdraw their funds from any type of staking or lending platform, as liquidations and failures to repay debt spreads through the tightly-interconnected ecosystem. On June 16, yield farming platform Finblox implemented a very low cap on the amount of funds customers could withdraw, citing exposure to the apparently insolvent Three Arrows Capital.
- "Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures'", CoinDesk
- Notice from Babel Finance