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Voyager Digital cuts withdrawal limits to $10,000 over 3AC risk

Voyager Digital has reduced withdrawal limits for users just hours after it was revealed that the company had received a $200 million investment from Alameda Ventures.

In addition to a $612 million exposure to Three Arrows Capital, Voyager Digital recently announced a $200 million loan from Alameda Ventures. Voyager Digital's stock dropped 60% after the bailout was announced.

Users have reported that the platform's withdrawal limit has been reduced to $10,000 per day. According to a helpdesk article on its website, the previous withdrawal limit was $25,000. The move is most likely part of an effort to reduce the risks of a liquidity crisis in the midst of turbulent market conditions, as well as its exposure to 3AC.

3AC was insolvent and unable to pay a $25 million default notice from Voyager, which was due on June 24. The inability to repay even 4% of its debt does not bode well for its ability to repay the remaining $612 million. According to a report filed by Voyager Digital on May 16, 2022,

“The Company limits such credit risk by lending to borrowers that the Company believes, based on its due diligence, to be high-quality financial institutions with sufficient capital to meet their obligations as they come due.”

Voyager reported a $61.5 million loss in the first quarter of 2022, according to its most recent earnings. Voyager had $3.4 billion in crypto assets and had loaned out $2.4 billion as of May 2022. It also holds $5.4 billion in client crypto assets in custody. With a net worth of $1 billion, Voyager may be able to withstand monthly losses of $20 million. A bank run on its custodial holdings, on the other hand, could cause serious problems for the exchange.

Among the concerned investors, one user who had increased his withdrawal limit to $125,000 had a $90,000 withdrawal refused, while others reported that their limits had been reduced to $10,000 per day. Several other Twitter users have confirmed that their daily limits have also been reduced to $10,000.

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