During the period of Voyager\’s loan of US $654 million to 3AC, both parties only conducted one due diligence

According to reports, court documents submitted on Tuesday showed that just a few weeks before filing for bankruptcy, the crypto hedge fund Sanjian Capital (3AC) sent a one-page statement of net asset value (NAV) to the lending agency Voyager Digital. Voyager said that it had lent $654 million to 3AC, accounting for nearly 58% of its loan portfolio. During this period, both parties only conducted one due diligence.

Interpretation of this information:

The news about Sanjian Capital’s bankruptcy has been circulating recently, with the latest reports revealing a one-page statement of net asset value (NAV) to Voyager Digital being sent just a few weeks before the filing. This document is important for a few reasons, one of which is that it shows the precarious financial position of the crypto hedge fund.

According to the statement, Sanjian Capital had a total NAV of only $45 million. To put this in perspective, Voyager had lent $654 million to 3AC, which accounts for nearly 58% of its entire loan portfolio. This means that a single borrower was responsible for a significant portion of the lending agency’s loan book.

The revelation that both parties only conducted one due diligence during the loan process is also significant. Due diligence refers to the process of assessing a borrower’s financial situation and ability to repay the loan. Based on this information, lenders can determine whether they should approve a loan, how much money to lend, and what the interest rate should be.

The fact that a significant loan was approved with just one round of due diligence raises questions around Voyager Digital’s lending practices. In this case, the lender appears to have taken on a high level of risk, as evidenced by the borrower’s subsequent bankruptcy. It’s unclear whether Voyager was aware of Sanjian Capital’s precarious financial position before lending the money, but the fact that they only conducted one round of due diligence raises eyebrows.

The news about Sanjian Capital’s bankruptcy and the loan from Voyager Digital shed light on the risks associated with cryptocurrency investing. The high level of volatility and regulatory uncertainty surrounding cryptocurrencies can make them a risky asset class to invest in, requiring investors to conduct thorough due diligence before making any investment decisions.

In conclusion, the news about Sanjian Capital and Voyager Digital serves as a cautionary tale for investors in the crypto space. While cryptocurrencies have the potential for high returns, they come with significant risks that must be carefully managed. Thorough due diligence is a crucial part of this process, and investors must take the time to assess the financial stability and credibility of any companies they are considering investing in.

Keywords: cryptocurrency, due diligence, Voyager Digital.