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TSX-listed crypto company Voyager Digital warns of US$655-million loan default, shares plummet 53 per cent

TSX-listed Voyager Digital Ltd.’s VOYG-T shares are management on the possibility of a US $ 655 million loan default to a problematic hedge fund as investors continue to fear financial transmission. Lost half of its value in a day after warning. Recent crashes in the crypto sector.

Launched in Canada in 2019, Voyager has historically been known as an exchange where individual and institutional investors can buy and sell cryptocurrencies. But recently, the company has expanded its business and one of its new divisions is offering loans to institutional investors. At the end of March, Voyager lent $ 2 billion worth of crypto assets, according to quarterly filings.

On Wednesday, Voyager lent US $ 655 million in the form of 15,250 Bitcoin and US $ 350 million worth of USDC (another cryptocurrency) to Three Arrows Capital, a hedge fund known for trading cryptocurrencies. I made it clear.

In a notice to investors, Voyager initially requested a repayment of USDC worth US $ 25 million from Three Arrows by June 24, followed by a repayment of all USDC and Bitcoin balances by June 27. Said that he requested.

“Neither of these amounts have been repaid, [Three Arrows] Repaying the requested amount by these specified dates constitutes a default event, “the company wrote, adding that” we cannot evaluate the amount that can be collected at this time. “

Earlier this month, Three Arrows revealed that it had hired a legal and financial advisor after enduring significant losses in the recent crypto sector crash. Founded in 2012, the hedge fund invested about US $ 200 million in the cryptocurrency Luna, whose value plummeted in early May in a few weeks. The prices of most cryptocurrencies have also fallen this year, creating more losses.

After Wednesday’s disclosure, Voyager shares fell 53% by the closing price. Equities have fallen 95% since the beginning of the year, and the company’s market value has plummeted from about $ 3 billion to $ 148 million in six months.

Cryptocurrency prices have plummeted for several months, and Bitcoin prices have fallen 70% from their November peak. However, there are concerns that the pain will be widespread as the crypto sector has recently begun to transform into a shadow banking system with loans and other commodities. In some cases, the collateral provided for these loans was provided in the form of cryptocurrencies.

The trouble is that the growing shadow system has little regulation and little transparency. As a result, it is difficult to determine how each lender’s exposure and everything is connected.

Last week, cryptocurrency lender Celsius Network Ltd. said it would “take time” to freeze all withdrawals and transfers between 1.7 million customers and then normalize operations. .. Little is known about the extent of the predicament.

Voyager is currently the second TSX-listed cryptocurrency company suffering from the collapse of Luna. In May, Mike Novogratz, CEO of Galaxy Digital Holdings Ltd., a major cryptocurrency company listed on the Toronto Stock Exchange, publicly apologized for the significant promotion of Luna. In November. At its peak, the company was worth $ 14 billion.

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