The past few weeks have been all about crypto blowups — First Terra Luna, then Celsius, followed by Three Arrows Capital (3AC).

This week, another company is in the hot seat. Toronto-based crypto brokerage Voyager Digital (TSE:VOYG) fell over 50% after revealing a ~$650M loan to 3AC — which Voyager might not get back.

Crypto contagion makes its way to Voyager

Voyager offers crypto trading and staking services with over $5.8B in assets at the end of March. In 2019, Voyager went public on the Toronto Venture Exchange and was later listed on the U.S. over-the-counter exchange under the tickerVYGVF

.

At the start of 2020, Voyager started the year trading at 24 cents. At the peak of the crypto bull run, it went as high as $38 — a 158x return — just to make a roundtrip back to 73 cents yesterday.

• Peak: In the quarter ending December 31, 2021, Voyager made $164M in sales with a $2.6M profit.
• Decline: Crypto’s slowdown had a major impact on Voyager’s business. In the recent quarter ending March 31, sales fell 37%, and Voyager lost $67M.

Voyager is falling victim to other parts of the crypto market. Crypto hedge fund Three Arrows Capital (3AC) is at risk of bankruptcy — leaving its lenders fighting for whatever’s left.

Voyager made a repayment request to 3AC with a June 27 deadline — but hasn’t received payment and doesn’t know how much it can recover.

Nearing the end of its voyage?

At the end of March, Voyager owed $5.5B to its customers, but it lent out $2B of those assets, with nearly a third to 3AC.

• The problem: If Voyager fails to get its 3AC loan back — it would be way short of giving back customer funds.
• The unknown: That’s only 3AC, and it’s uncertain how much risk Voyager took on with the rest of its loans.

Suppose everyone began to withdraw their crypto from Voyager. In that case, Voyager may not have enough to pay everyone back — a position in which Celsius and other crypto platforms are finding themselves.

Yesterday, Voyager limited daily withdrawals to $10K while Celsius stopped withdrawals altogether.

Investors: Is Voyager safe?

Voyager received a $485M loan from crypto fund Alameda Research for safeguard “only if such use is needed.” In addition to the new loan, Voyager has ~$152M in cash and crypto, but it’s uncertain how far these funds will reach.

Several analysts, including Compass Point analyst Chris Allen, have downgraded Voyager’s stock — saying there are “survivability questions” that lack clarity on the situation (CoinDesk).