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Laura Shin Asks Terra’s Do Kwon The Tough Questions. What Did We Learn?

This is the Do Kwon interview everyone was waiting for. In the latest episode of Laura Shin’s Unchained Podcast, titled ‘It Was Never Really About Money or Fame or Success’, the Terra creator faces serious scrutiny. Do Kwon denounces media misinformation, denies several serious charges and gives a play-by-play explanation of the organization’s movements during the crash. And he sweats bullets. 

Laura Shin did her homework, and relentlessly puts forward the questions most Terra investors have. She does this in a non-threatening, extremely professional way. Do Kwon answers all of her questions. Some better than others, but the man does show his face and answers, which is a lot. Compassionately, Laura Shin also gives Do Kwon a second opportunity to say sorry to Terra’s affected investors and their families. He would’ve come across much worse if she hadn’t offered that second chance.

The episode’s intro says:

“Do Kwon, cofounder of Terraform Labs, discusses the charges against him, gives a message to Terra victims, answers allegations about potential fraud and non-transparent business practices.”

This is the video:

This Do Kwon interview is one for the books, everybody interested in the subject should watch it. Let’s bring out the bullet points and analyze this phenomenal piece of media.

Do Kwon On His Location And “On The Run” Status

  • He claims he doesn’t live in South Korea anymore and he’s not planning to return to face the alleged charges. He plans to appeal, though.
  • Do Kwon hasn’t seen a copy of the arrest warrant.
  • Apparently, cryptocurrencies are securities in South Korea. 
  • His team has been cooperating with South Korean authorities, fulfilling the court requests for different documents.
  • Do Kwon refuses to reveal his current location because of the difficulties it brings to his living situation. He denies he’s on the run. 
  • He denied frozen funds at the KuCoin and OKX exchanges belong to him, Terraform Labs, or the LFG foundation.

The most important news Do Kwon reveals, though, is that the organization is working with a chain analysis firm to produce a paper on their trading activities. “They should be publishing a report shortly, which I think is going to provide a lot more clarity,” he said. Do Kwon promised the report in “the next couple of weeks.”

LUNA price chart on Kraken | Source: LUNA/USD on TradingView.com
Terra Was a Failure But It Was Not A Scam

  • Do Kwon claims that his online persona was an alter ego and confesses that he got carried away with the “sh*tposting.”
  • Terra’s failure was caused by the protocol’s “weakness to respond to the cruelty of the markets.”
  • He admits to a lot of technical and theoretical mistakes but denies Terra was a scam. 
  • Do Kwon claims that the Anchor developers/ whistleblowers that came forward denouncing the protocol were only interns. Not a line of their code appears in the final product, and this is apparent in GitHub. 
  • Admits to the SDT premine of $1.4B. This was a second stablecoin that the Terra organization used to maintain the UST peg to the dollar. This stablecoin wasn’t even mentioned in the Terra whitepaper. According to Do Kwon, this was because they hadn’t conceived SDT when they wrote it. He claims Terra’s is an “academic whitepaper” and wasn’t supposed to cover all of the technologies’ use cases.
  • Do Kwon admits they were using market operations to maintain the UST peg to the dollar. In fact, he says this was always the idea. The burning and minting of LUNA was not the only procedure that was supposed to maintain the peg.

Do Kwon And The Other Admissions

  • Apparently, Terra and Chai haven’t been working together for a long time.
  • When asked about faking Chai’s numbers and interactions registered in the Terra blockchain, Do Kwon said that the numbers came from Chai. According to him, they were probably “distancing themselves” from the Terra situation but still using the blockchain.
  • When asked about his participation in Basis Cash, a failed algorithmic stablecoin, Do Kwon distanced himself from the situation. He was just founding the team, but had nothing to do with the actual project. “Basis Cash is not something that I designed or operated. It’s something that I encouraged,” Do Kwon said.
  • When asked about if he was planning to compensate Terra investors from his own pocket, Do Kwon said, “my personal funds are not significant enough to make a difference.”
  • He still believes the world needs to work towards a decentralized future and that we need censorship-resistant money. 

As for his future plans, Do Kwon says he plans to continue building “highly experimental” projects in the crypto space.

Featured Image: Do Kwon and Laura Shin, screenshot from the video interview | Charts by TradingView

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Terra Coin Price Balloons 30% – But Can LUNA Reach Higher Terrain?

Terra (LUNA) woke up to a good day on Wednesday as the token made an impressive 30% jump in its price on the way to tallying a high of $3.08.

  • Terra accounted for 25.06% of the entire token holdings among the top 100 ETH whales
  • LUNA price surged by 30% today and hit $3.08
  • Bullish momentum is possible and trading price might reach $3.25

The crypto, though, immediately experienced price correction as it is trading at $2.69 at press time according to tracking from Coingecko.

Still, Terra is looking at a 5.5% increase for the past seven days and a higher jump of 7.4% for the past two weeks.

It is still miles away from its all-time high of $18.87 attained in March 28 of this year, losing 85.6% of that value.

The good news is that it is currently up by 77.6% of from its all-time low of $1.53 hit on August 29, 2022.

Terra Surges As It Flips Lido Staked ETH Tokens

According to online crypto information source WhaleStats, Terra became the top holding by dollars of the top 100 Ethereum whales, accounting for 25.06% of all token holdings.

In doing so, LUNA was able to edge out Lido staked ETH (stETH) tokens and even surpassed USDC and USDT holdings of the whales.

In total, Ethereum whales included in the top 100 held around $820 million worth of Terra digital coin.

The wormhole interoperability protocol asset was then leveraged by the Ethereum whales to exit liquidity, causing the unprecedented rally that pushed LUNA price to grow by 30%.

Terra also witnessed a 150% increase in its trading volumes for the past hours, contributing to the bullish rally the digital asset made.

Terra Price Action At A Glance

While the Terra coin price ballooned by 30%, it still remains to be seen if LUNA can reach higher terrain during this time when crypto market is looking at high level of uncertainties among market participants.

It can be recalled that during the period of September 10 to 26, there was a massive sell-off involving the altcoin, driving its price all the way down to the $2 psychological support marker.

This led to the formation of a pennant pattern for Terra, indicating a continuance of the bearish momentum it was in before this recent price surge.

But all is not lost for LUNA, as there is a slight chance that the token will break the overhead trendline. If that happens, just like today, Terra might end up in an upward trend, going as high as 20% to hit $3.25.

As for its intraday performance, the altcoin is in a bullish trend but volatility remains high.

Crypto total market cap at $853 billion on the daily chart | Featured image from CafeF, Source: TradingView.com

Disclaimer: The analysis represents the author’s personal views and should not be construed as investment advice.

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LUNC Price Gains 50% Despite Kwon’s Troubles, What’s Driving It?

Over the last week, the crypto space has been saturated with news of the hunt for Terra (LUNC) founder Do Kwon. The South Korean founder is now being hunted by both South Korean authorities, as well as Interpol, which means Kwon is now wanted in 190 countries. However, Kwon’s troubles seem not to have affected the price of LUNA Classic (LUNC), as it continues to see green even when the broader market suffers losses.

LUNA Classic Grows 50%

Speculations around the performance of LUNA Classic (LUNC) had risen drastically once Kwon was officially declared wanted by the authorities. It was mostly expected that the digital asset would take a beating from the resulting decline in positive sentiment among its investors, but this has not been the case. LUNC has instead shaken off these incredibly bearish developments and has been one of the market leaders in terms of gains.

Over the last 7 days, the price of LUNC is up more than 58%, whereas its larger counterparts, such as Bitcoin and Ethereum, have been seeing single-digit and negative gains. The daily trading volume of the cryptocurrency remains high, with almost a billion dollars in volume reported by Coinmarketcap. LUNC had also successfully knocked off another zero over the past month to bring its trading price to the $0.0003 level.

LUNA Classic trending at $0.00032 | Source: LUNCBUSD on TradingView.com

Even coming out of the weekend of low performance in the crypto space, LUNC has begun to turn towards green, already up 1.80% in the last hour as of the time of this writing. It also shows no sign of decline at this time as it continues to receive massive support from crypto traders.

Why Is LUNC Price Up?

Since the collapse of the Terra network, there have been some strides made in an effort to restore it by those who refuse to give up on it. It was a long time in the making, but the community had eventually agreed on a 1.2% transaction fee on all transactions, which are then sent to a burn wallet to reduce the available supply of the token.

Binance, the largest crypto exchange in the world, had also joined in this effort to support LUNC’s price by announcing that it would be burning all fees realized from LUNC trading on its platform. LUNC’s price had surged more than 60% off the back of the announcement alone as the crypto exchange announced that it would be carrying out a scheduled weekly burn every Monday.

Another factor that has been propping up the price of LUNA over these past couple of weeks has been rumors that have been circulating that LUNC was going to get listed on some important platforms. These trading platforms include Robinhood and Coinbase, a move that would instantly drive up the value of any cryptocurrency. However, these are just rumors for the time being.

Nevertheless, LUNC remains a fan favorite over this time due to its high volatility. Its already established community is also a draw for investors who believe that the digital asset could return to its past glory. But with its founder currently rumored to be on the run from authorities, it is unlikely these large trading platforms will pick it up.

Featured image from Finbold, chart from TradingView.com

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Terra Dries Up As LUNA Sheds 40% From Recent High

LUNA has increased by about 300% just these past days, making it appear as if it had risen from the ashes. The feat began on September 9 and ended within a couple of hours.

This is a result of a proposal to put a 1.2% token burn tax on all transactions, which will allow LUNC to become a deflationary cryptocurrency, according to a recent tweet from Haily LUNC.

Unquestionably, the May-June LUNA crash has influenced the whole crypto community. There is a correlation between LUNA and other crypto stalwarts such as Ethereum if we compare the two. It may not be a price correlation, but rather investor sentiment.

Following the latest market crisis, the market as a whole declined even worse. In the past few months, Bitcoin and the other leading currencies in the market have experienced severe bear markets.

Given the issue surrounding LUNA, this rebirth is due to TERRA’s latest request for a 1.2 percent transaction fee. According to TERRA, this would consume 1.2% of the total LUNA in circulation per transaction.

According to a recent analysis, the current surge in price poses a risk of reversal. After its unexpected price increase, TERRA declined by 30 percent, proving the validity of my analysis.

StakingRewards estimates a yearly return of 38 percent on LUNA stakes. If TERRA keeps rising, the expected profits might be quite lucrative. But the state of things for TERRA as it is right now is not promising.

Recent growth stems from expectations that LUNA will bounce back from a devastating decline. Only 1.2% of all LUNA will be destroyed, but is it enough for LUNA to reclaim its former prominence?

According to the coin’s technical indicators, the latest “rise” was its final hurrah. The price of LUNA tends to converge at the 4-hour mark, which increases the potential for a fall at such times. The picture is also more distinct thanks to the 1-hour time marker.

Right after the upswing ended, it plummeted, only to recover somewhat before continuing its downward trajectory. Overbuying signs mean the present support line at the 61.80 Fib level won’t hold.

Crypto total market cap at $962 trillion on the daily chart | Source: TradingView.com

Featured image from Business Today, Chart from TradingView.com

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Despite Bear Market Uniswap Gains Significant Traction, What’s The Reality?

The past few weeks have brought a positive twist in the flow of events within the cryptocurrency market, especially for Uniswap. Lots of the crypto assets are gaining more value in their prices. This overturns after the severe crypto winter that puts lots of protocol at the edge.

Most witnessed drastic price drops up to 50% since January 2022. The last chaos in the crypto space was better imagined than described.

Additionally, the collapse of the algorithmic Terra stablecoin and its native token, LUNA, spiked the downward trend. Several investors lost millions of dollars, creating tension in the entire crypto industry. Some crypto service companies were thrown off balance as they struggled to be their ship afloat.

However, a few of them still went bankrupt with most of their depositors’ funds locked on their platforms. Some participants in the industry are beginning to lose confidence in digital assets as fear, uncertainty, and doubt gradually crept in.

All seems to be going progressively well for Uniswap, as its native token, UNI, increases its price value. The strength of its price increase has put Uniswap in ranking by market cap among the top 15 cryptocurrencies.

In addition, the Ethereum-based decentralized protocol has experienced a significant surge in value, reaching 150% over the past seven weeks.

Uniswap Sentiment Activity l Source: Sentiment

According to data from Santiment, an on-chain analytics firm, there has been an increased and substantial whale accumulation of the UNI tokens. This explains its recent price rally as well as the surging address activity.

Santiment reported that the Uniswap daily active addresses have risen to over 1,100. With the presence of strong address activity on the network, the protocol has the potential to sustain the current price action.

Uniswap Whale Addresses Push Positive Moves

Uniswap whale addresses have shown a positive move since the crypto crash of May 2022. The addresses have accumulated vast amounts of UNI tokens ranging in massive percentages. In their performance, whale addresses containing up to 100 thousand to 1 million UNI tokens have undergone massive accumulation within the past two weeks.

Also, Santiment noted that the level of transactions they deem to be prominent are those taking about $100,000 or more. It mentioned that such transactions are from the whales and moving back to those seen in May levels.

So, it stated that all the recent significant transactions from the whales are noticeable. This is because such moves accumulated just in the past week before the price climbed to $9.69.

Uniswap has recently gained massive traction recently l Source: UNIUSDT on TradingView

Besides its price rally, Uniswap has increased its active average trader returns. It currently recorded over 22.5% in its 30-day MVRV.

According to the report from Santiment, the current value is clearly above the danger zone. Despite Uniswap’s impressive price rally, Santiment has advised investors to tread with caution with the protocol.

Featured image from Pexels, charts from TradingView.com

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Blue Chip NFTs 101 – Down, Down, To Goblintown. An Unlikely Success Story

Goblintown ‘s rise to the top is one for the books. The Moonbirds came into prominence in a bearish market, but the Goblins took over in the middle of a global recession and the NFTs first winter. How did these misfits do it? Using confusion, misdirection, FOMO, and a great marketing plan that took everyone by surprise. People weren’t sure of what was happening, but they didn’t want to stay out of the party. 

The creators of Goblintown made it easy for them. First of all, the project was a free mint. Second, it uses a Creative Commons Zero license, which means no Copyright and the possibility of commercializing the Goblin drawings as needed. Third, even though the hype was there, they didn’t use influencers, cross promotions, or whitelisting. Maybe because of that, the mint didn’t generate a gas war like many other successful projects.

Goblintown ‘s Unusual Launch

Launched on May 22, 2022, the generative collection runs over the Ethereum blockchain. From the beginning, Goblintown promised, “No roadmap. No Discord. No utility. CC0. Contract wasn’t actually written by goblins.” The other sentence that stands out from Goblintown’s website is: “Don’t be f*cking greedy. That’s how we got ourselves here.” This suggests that the collection serves as a commentary on the NFT market and culture. And that’s not the only clue pointing that way. 

On the slightly negative side, the royalties are a whopping 10% and the creators set aside 1000 NFTs for their other projects’ holders. Considering Goblintown was a free mint, those two factors don’t seem that bad. So far, the main collection has generated 43.9K ETH in total sale volume and has a 3.1 ETH floor price at Opensea. For a moment there, Goblintown was so hot that it flipped the almighty Bored Ape Yacht Club and became the highest-selling collection for a day or two. 

The Mystery Of Goblintown’s Creators

At first, they thought it was notorious NFT artist Beeple. Then, that the infamous Yuga Labs was behind the project. For a time there, people even believed that the brain and voice behind “Beavis And Butthead” and “King of the Hill,” Mike Judge was Goblintown’s creator. And, since one of the Goblins kind of looks like Snoop Dogg, that rumor circulated too. It made sense because people still believe that Snoop is famed NFT collector Cozomo de’ Medici, even though that story proved to be false.

The only one that came forward and addressed the rumors was Beeple, who tweeted, “insane I have to say this, but I have not joined any shockingly low effort pump and dump projects that will remain nameless.” Later, as the Goblintown project proved its worth, the creator changed his tune and tweeted the piece “The rise and fall of Goblintown” together with the hashtag “#iamthefounder.”

However, Beeple was not the founder. Seeing Goblintown’s immense success, the mysterious creators had to doxx themselves. Just in time for the NFT NYC conference, they released a message in which they admitted that Truth Labs was behind the project. The company was behind the mildly successful NFT collections Illuminati Collective and The 187, and struck gold with their third outing.  

On Truth’s website they define themselves as:

“We are dedicated to sharing delightful blockchain mischief, exploring creatively, developing rich, fun worlds and experiences (both IRL and in the digital realm), and providing a platform for new voices and visions in this space.”

In a strange turn of events, as the creators doxxed themselves, Goblintown’s floor price fell from almost 5 ETH to a little over 3 ETH. 

ETH price chart for 07/16/2022 on Binance | Source: ETH/USD on TradingView.com
The Collection’s Iconography

The Goblintown name comes from The Hobbit, specifically from a J.R.R. Tolkien poem called “Down, Down, To Goblin Town.” That name also suggests that the collection serves as a commentary on the NFT market in the crypto winter. Are there other clues? Several. For example, one goblin like Dj and producer Steve Aoki, who’s a notorious NFT collector. Another one wears a t-shirt that says “Phunks, Zunks, Tendies, Azuki,” a clear reference to Azuki’s creator and all of his rugged previous projects.

Yet another one of the traits is a reference to the infamous Mike Novogratz’s Luna tattoo, and thus a commentary on Terra’s collapse. 

And, what about this image that references a lot of blue chip NFT projects and is titled “Up, Up, To Goblintown.” 

And well, speaking about Steve Aoki, he was the Dj at Goblintown’s highly coveted NFT NYC party. There, he premiered the horrible NFT song “Piss On the Dance Floor (Goblintown Anthem).“ You can still buy it at a reasonable price here. And, speaking about NFT NYC, for better or worse, Goblintown managed to be the center of attention throughout the whole conference. 

What a story.

Featured Image: Screenshot from their site | Charts by TradingView

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How This Company Lost 99% Of Its Clients Funds Shorting LUNA

Per a report from Sedaily, the trading arm of Korean startup Uprise has lost of all its clients’ funds. The platform was used by wealthy individuals and institutions to trade crypto futures contracts via an artificial intelligence (AI) tool.

Related Reading | Altcoins Take The Lead As Bitcoin Struggles To Hold Above $20,000

According to the report, Uprise advertised its AI trading tool as high operational stability and a high-risk management alternative. In addition to losing its clients’ funds, the company was reported to record a loss of around $30 million from its own capital.

Uprise operates an AI trading platform and a crypto exchange platform. Users are encouraged to deposit cryptocurrency to trade with Uprise’s tool or to earn an annual percentage rate (APR) by holdings the assets on the exchange.

The local news media claims the platform is yet to inform its clients about the alleged massive loss. The report claims the trading AI placed several short positions on the failed cryptocurrency LUNA and was negatively impacted by the market volatility.

LUNA was Terra’s former native token which operated with a burning/issuance mechanism linked to the failed algorithmic stablecoin UST. Via the Anchor Protocol, Terra users were able to receive a 20% APR on their UST deposits.

Both UST and LUNA collapsed losing over 99% of their value in less than two weeks. Uprise is not the only firm negatively impacted by the collapse of the Terra ecosystem.

The fallout forced crypto hedge fund manager Three Arrows Capital (3AC), crypto lending company Celsius, BlockFi, and others to liquidate their LUNA positions recording millions of dollars in losses. As a consequence, the crypto market has experienced a steeper downside.

The report adds that Uprise “explained” and “informed” their users “in advance” about the high-risk nature of their product and about the “high possibility of a loss of principal” capital. However, South Korean regulators and law enforcement agencies could increase their scrutiny of the digital asset class.

Crypto Markets Still Recovers From LUNA Collapse

The South Korean startup apparently failed to register as a Virtual Asset Service Provider (VASP). Thus, it might have incurred an illegal action.

At the time of writing, there are no official statements from South Korean authorities. Uprise did confirm Sedaily’s report. A spokesperson for the platform said:

It is true that damage to customer assets has occurred due to unexpected great volatility in the market. We plan to finalize the report on virtual asset business soon,

The report claims the company might need to compensate its customers due to their losses. South Korean authorities have been investigating the events that led to the LUNA collapse. Thus, why the startup could take some heat if it is unable to make its clients whole.

Related Reading | Bitcoin Approaches 2018 Like Drawdown, Why $20,000 Is A Crucial Level

At the time of writing, BTC’s and larger cryptocurrencies are still trying to reclaim higher levels. The Terra fiasco might put more pressure on digital assets as other companies like Uprise come to light.

Crypto total market cap trends to the downside amid LUNA’s collapse. Source: LUNAUSDT Tradingview

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Extreme Fear Remains: Recapping What’s Behind The Crypto Market Panic

The current streak of extreme fear is already the longest ever in crypto history, and it’s continuing on still. Here’s a recap of the major events responsible for this bottom sentiment.

Crypto Fear And Greed Index Continues To Point At “Extreme Fear”

The “fear and greed index” is an indicator that tells us about the general market sentiment among crypto investors.

The metric uses a numeric scale that runs from zero to hundred for representing this sentiment. All values below the fifty mark imply a fearful market, while those above the threshold mean investors are greedy right now.

End values of above 75 and below 25 indicate extreme sentiments of “extreme greed” and “extreme fear,” respectively.

Now, here is a chart from the latest weekly report from Arcane Research, that shows the trend in the crypto fear and greed index over the past year:

Looks like the value of the indicator has been very low in recent weeks | Source: Arcane Research’s The Weekly Update – Week 25, 2022

As you can see in the above graph, the current value of the crypto fear and greed index is 10, which suggests the market is extremely fearful at the moment.

This run of extreme fear has been going on since more than two months now, and it’s the longest ever such streak in the history of the metric.

Related Reading | What Is Bitcoin CFD and How Can It Make You a Profit

Even before this latest run of extreme fear, the market sentiment wasn’t particularly well during the rest of 2022. However, it wasn’t still quite as rock bottom as the current streak.

So, what’s behind this historically low sentiment? There are a number of market conditions that have lead to it and that are continuing to keep it so.

The first event of note is the UST collapse in May. A large stablecoin like Tether USD losing its peg put fear and uncertainty into many investors in the market.

Another is the looming macro uncertainties over the market like the possibility of FED hiking rates and the various governments around the world tightening regulations.

Related Reading | Bitcoin “Reserve Risk” Metric Approaches All-Time Lows

These above factors snowballed into a bottom sentiment and lead to larger consequences over the entire crypto market in the form of the crash.

A byproduct of the latest crash was the collapse of Three Arrows Capital (3AC), a cryptocurrency hedge fund. Another was the lender company Celsius halting withdrawals and potentially heading towards bankruptcy.

Such negative news is keeping the fear and greed index from recovering from these historic lows. Like a vicious cycle, bad news is leading to more bad news and further fueling the extreme fear sentiment.

BTC Price

At the time of writing, Bitcoin’s price floats around $20k, down 1% in the past week.

BTC plunges down | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research

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Controlling The Chaos: Alameda Ventures Bails Out Voyager With $200M & 15K BTC

Apparently, Voyager Digital is out of the woods. The company ran into liquidity issues when Three Arrows Capital failed to pay a huge loan to them. Welcome to another chapter of the crypto death spiral caused by the Terra/ Luna collapse. Who came to the rescue this time? Sam Bankman-Fried’s other company, Alameda Ventures. Is this man bailing out crypto or is he taking total control of the industry?

In a recent press release, Voyager Digital announced that it “entered into a definitive agreement with Alameda Ventures Ltd. related to the previously disclosed credit facility, which is intended to help Voyager meet customer liquidity needs during this dynamic period.” That’s a way to put it. The company received “US$200 million cash and USDC revolver and a 15,000 BTC revolver.”

This morning, we announced a definitive agreement with Alameda Ventures for a $200 million dollar cash / USDC revolver and a 15,000 BTC revolver.

Read today’s release: https://t.co/8wPfzcaI6K

— Voyager (@investvoyager) June 22, 2022

As a reminder, yesterday transpired that FTX, also owned by Bankman-Fried, bailed out BlockFi with $250M. At the time, we described the situation as follows:

“Over the last few weeks, the crypto market has been trending down. The contagion effect of the Terra/ Luna extinction event rocked every company out there, most of all those who offered yield on cryptocurrency deposits like BlockFi and Celsius and hedge funds like Three Arrows Capital. These companies’ problems and possible liquidation of assets, in turn, sent the crypto market into even more turmoil.”

The Voyager case fits right into that description.

Sam Bankman-Fried’s Loan To Voyager, The Conditions

The rumors were already flying. On June 16th, analyst Dylan LeClair tweeted “Speculation here, but in its quarterly report, Voyager had loaned $320m to a singapore based entity named “counterparty b”. One has to wonder whether “counterparty b” was 3AC and if so, how much of a hit Voyager took?” The answer came quicker than anyone thought. 

Speculation here, but in its quarterly report, Voyager had loaned $320m to a singapore based entity named "counterparty b".

One has to wonder whether "counterparty b" was 3AC and if so, how much of a hit Voyager took? $VOYG shares are down 33% over the last two days… pic.twitter.com/sCiYskwLEq

— Dylan LeClair 🟠 (@DylanLeClair_) June 16, 2022

In the press release, Voyager explained the loan:

“As previously disclosed, the proceeds of the credit facility are intended to be used to safeguard customer assets in light of current market volatility and only if such use is needed. In addition to this facility, as of June 20, 2022, Voyager has approximately US$152 million cash and owned crypto assets on hand, as well as approximately US$20 million of cash that is restricted for the purchase of USDC.”

The loan comes with “certain conditions,” among them:

  •  “No more than US$75 million may be drawn down over any rolling 30-day period.”
  • “The Company’s corporate debt must be limited to approximately 25 percent of customer assets on the platform, less US$500 million.” 
  • “Additional sources of funding must be secured within 12 months.” 

Voyager Digital price chart on OTC | Source: TradingView.com
It’s All About Three Arrows Capital Right Now

The press release confirms the rumors, the Singapore-based entity named “counterparty b” was 3AC. “Voyager concurrently announced that its operating subsidiary, Voyager Digital, LLC, may issue a notice of default to Three Arrows Capital (“3AC”) for failure to repay its loan.” In a recent article, our sister site Bitcoinist broke down the hedge fund’s situation:

“The crypto fund had been directly in the crosshairs of the Luna crash with exposure of more than $200 million and speculated to be as high as $450 million. At first, the firm had appeared to bounce back from the Luna collapse but it would be soon obvious that 3AC was in a more perilous position than investors thought.”

The Voyager situation makes it even more obvious. The company’s “exposure to 3AC consists of 15,250 BTC and $350 million USDC”. So, the Alameda loan covers most of it. What did they have to give in return, though? Formally, “Alameda currently indirectly holds 22,681,260 common shares of Voyager (“Common Shares”), representing approximately 11.56% of the outstanding Common and Variable Voting Shares”. If everything goes well, Voyager has nothing to worry about. But, what if it doesn’t?

Voyager levered 3AC up with 650million of their customers money, leaving them with only 150million cash reserves.

Who tf is in charge of risk over there, Merrill Lynch?

— Tyler (@ApeDurden) June 22, 2022

In any case, for those that like gossip, here’s the story as narrated by Voyager:

“The Company made an initial request for a repayment of $25 million USDC by June 24, 2022, and subsequently requested repayment of the entire balance of USDC and BTC by June 27, 2022. Neither of these amounts has been repaid, and failure by 3AC to repay either requested amount by these specified dates will constitute an event of default. Voyager intends to pursue recovery from 3AC and is in discussions with the Company’s advisors regarding the legal remedies available.”

Answers And Conclusions

The crypto industry as a whole is in a precarious situation. And there’s one question at the center of it, is Sam Bankman-Fried controlling the chaos or is he taking total control of the industry?

Featured Image by Sebastian Herrmann on Unsplash | Charts by TradingView