Welcome back to the Deep Dive. I hope you're
sitting down for this one because we're about
to unravel a story that feels less like a corporate
case study and more like the script of a financial
horror movie. It really does. It's got everything.
Billions of dollars just evaporating overnight.
A company that rises from nothing to the stock
exchange and then back to nothing in record time.
And a plot twist. You can't forget the plot twist.
Oh, the plot twist involving a savior who turns
out to be... Well, maybe the biggest villain
of them all. It really is the definitive story
of the 2022 crypto contagion. It's a domino effect
in the purest, most destructive sense of the
term. Yeah. We're talking about Voyager Digital.
Voyager Digital. The name itself sounds so optimistic,
doesn't it? Like, come with us, we're going to
the moon. Right. It has that adventurous, exploratory
feel. But as we were going to find out, the rocket
didn't just fail to launch. It exploded on the
pad and it took a lot of regular people's savings
with it. And the speed of this story is what
really stands out to me. We are looking at a
timeline that is, it's just shockingly compressed.
It's wild. This company was founded in 2018.
By July 5, 2022, it was effectively dead, buried,
liquidated. Four years. That's it. That's a high
school education. That's one presidential term.
Right. That is the entire lifespan of this multibillion
dollar entity. Exactly. And our mission today
is to slow that timeline down. We want to unpack
specifically how this happened based on the available
records. We aren't just looking at a standard
bankruptcy here. We are looking at the total
liquidation of a cryptocurrency hedge fund and
brokerage that hundreds of thousands of people
trusted. And before we get into the gears of
the machine, we need to talk about where we are
getting our in. The sources. Yeah. We're pulling
the facts for this deep dive, primarily from
the archives on Voyager Digital, specifically
the Wikipedia records. But there's a really interesting
note right at the top of that source file. I
saw that, too. It's almost like a disclaimer.
It is. It flags itself as being slanted towards
recent events. Which is, I mean, that's a polite
way of saying the history is written by the disaster.
Right. It explicitly says it's missing information
about the history of the company before 2022.
Yeah. It's like we have a black box recorder
from a plane crash. Right. But we only have the
tape for the last 10 minutes when the engines
were on fire. Exactly. We don't have the tape
from when they were serving drinks at cruising
altitude. That's a crucial point to keep in mind
as we go through this. We are looking at the
wreckage to understand the vehicle. History has
a funny habit of only remembering the explosions
not the construction. It's so true. Nobody writes
down the boring Tuesday in 2019 when the compliance
officer sent a memo. They only write down the
day the doors were locked in 2022. So we have
to play detective a little bit. We have to infer
the scale of what was built based on how loud
the crash was. Very good way to put it. And let
me tell you this was a very loud crash. Incredibly
loud. So if you're listening to this and you
maybe heard the noise about the crypto crash
of 2022, you know, you saw the headlines, maybe
you had a friend who was stressing out, or maybe
you lost money yourself. Which a lot of people
did. A lot of people. But you never really understood
the mechanics of it. This is for you. We are
going to go step by step through the collapse
of this specific giant. Let's get into it. Okay,
so part one, the entity. To understand the crash,
we have to understand the machine that crashed.
What exactly was Voyager Digital? It's a great
question. Because names in the crypto space can
be a little ambiguous. You have protocols, you
have DAOs, you have exchanges. Was this just
an app? Was it a bank? It was definitely not
a bank. And we are going to get to why that distinction
is absolutely critical. legally dangerous later
on. Okay. But structurally, Voyager Digital was
a cryptocurrency brokerage. Brokerage. Okay.
So like an E -Trade or Charles Schwab, but for
Bitcoin? That was the pitch. Yes. That's how
it looked to the consumer. But it was also operating
as a hedge fund, which is where things get really
murky. How so? What's the difference? Well, a
brokerage just executes trades for you. You say
buy, they buy. A hedge fund takes pooled money
and makes bets to earn a return. And Voyager
was doing both. They were effectively doing both
under one roof. It was founded in 2018. And here
is detail that really matters. Its headquarters
were in New York. New York City. That stands
out to me immediately. It should. A lot of these
crypto projects are headquartered in, you know,
the Bahamas or the Cayman Islands or some decentralized
cloud land where the regulators can't find them.
Right. Some jurisdiction of convenience. But
New York implies a certain level of, I don't
know, traditional corporate structure. It does.
It signals an attempt at legitimacy. It signals
proximity to Wall Street, to traditional finance,
to the real money. Right. If you are a retail
investor, just a normal person wanting to buy
some Ethereum, and you see an app based in New
York City, you automatically assume there are
adults in the room. You assume there is oversight.
Right. You think if they're in New York, the
aggressive regulators there must have signed
off on this. It just feels safer, doesn't it?
It absolutely does. It feels safer than sending
your money to an anonymous exchange based in
a tax haven. And they leaned into that image,
right? Yeah. The image of legitimacy. Oh, heavily.
if you look at their public status it wasn't
just a startup the source material mentions that
voyager digital began trading on the toronto
stock exchange the tsx that's a major board it
is a very serious exchange and we have records
of a nasdaq u article regarding that listing
so think about the picture being painted here
in late 2021 yeah this isn't some shady website
this is a publicly traded company on a major
north american stock exchange i could buy shares
of voyager in your retirement account. Exactly.
At the same time, use the Voyager app to buy
crypto. The lines were intentionally blurred.
That was September 2021. They are ringing the
opening bell. Metaphorically speaking, the stock
is trading. Yep. The crypto market is booming.
Bitcoin is heading toward, what, $69 ,000? The
absolute peak. It must have felt like they were
printing money. It likely did. And that public
listing, it acts as a shield. It makes people
stop asking questions. How so? Well, the thinking
goes, they're public, so they must be audited.
They must be solvent. They have to file reports.
It just creates a false sense of security. So
they had this consumer -facing platform. The
website was investvoyager .com. Invest Voyager.
Invest Voyager. It sounds so adventurous. Like
your Captain Kirk boldly going where no portfolio
has gone before. It certainly turned out to be
an adventure, though I think most customers would
have preferred a boring savings account in hindsight.
No kidding. So we have this established entity,
New York based, publicly traded, operating for
about three or four years. They are onboarding
grandmas and college students alike. That was
the target market, really. Mass retail. Then
we hit the catalyst. The moment the music stopped,
we need to talk about June 2022. This is where
the first domino falls. And it falls hard. The
records show Voyager made a stunning announcement.
They stated that Three Arrows Capital had not
repaid their loans. Now, for those who don't
know, Three Arrows Capital, everyone called them
3AC, was a massive hedge fund in the space. They
were the cool kids of crypto. They were seen
as the smart money, or so everyone thought, the
geniuses in the room. But let's look at the number,
because this is the part that makes my jaw drop
every time I read it. The debt that 3AC owed
to Voyager. It is a staggering figure, $666 million.
I mean, come on. You cannot write this stuff.
No. If you put that in a movie script, the producer
would tell you it's too on the nose. The loan
that kills the company. is exactly $666 million.
It is an ominous number, certainly. But let's
strip away the superstition for a second and
just look at the finance of it. Okay. From a
risk management perspective, that number is a
catastrophe. It's a complete failure. Let's unpack
that. Voyager is a brokerage. I, the customer,
put my US dollars or my Bitcoin into Voyager.
I see it on my screen. I think it's sitting there
in a vault. Right. You think it's your property.
But Voyager clearly was taking that money and
lending it out to generate yield. Correct. That's
the hedge fund part of the business. And they
lent over half a billion dollars to one entity.
That appears to be the case. And this is the
danger of the hedge fund model masquerading as
a brokerage. Explain that. In a traditional brokerage,
if you buy a stock, the broker holds the stock
for you. They don't lend it out to a gambler
in Vegas without your permission. But in crypto,
specifically with these yield bearing accounts,
that is exactly what was happening. Your assets
were being rehypothecated. And was this collateralized?
Like if I borrow money for a house, the bank
holds the D. If I don't pay, they take the house.
Did 3AC give Voyager $666 million worth of collateral?
The records suggest it was largely unsecured.
Unsecured. Or at the very least. significantly
under -collateralized, which, when the market
crashes, becomes the same thing as unsecured.
That's like me lending a stranger $50 ,000 on
a handshake because he has a nice suit. It's
worse. It's like lending your neighbor's $50
,000 to a stranger on a handshake. Right, because
this wasn't Voyager's money. This was customer
money. Precisely. The money they were playing
with belonged to hundreds of thousands of individual
people. That is terrifying. Why would they do
that? Why would a New York based publicly traded
company take a risk that massive on one borrower?
You have to look at the environment of 2021.
This was the super cycle. Everyone believed crypto
only went up. 3AC was viewed as invincible and
Voyager needed to generate yield. They were likely
promising customers what? 5%, 8%, 9 % interest
on their deposits. Yeah, the marketing was aggressive.
Earn 9 % APR on your USDC. I saw those ads everywhere.
Exactly. In a world where a bank pays you 0 .01%,
how do you pay 9 %? You have to take risks. You
have to take that money and lend it to someone
who is willing to pay you 10 % or 12%. And the
only people willing to pay those rates are high
-risk hedge funds making massive leveraged bets.
So it's a greed loop. It's a greed loop. To keep
the customers happy with high yields, Voyager
had to... take higher and higher risks. And 3AC
was the highest risk, highest return player in
the game. And they put all their eggs or at least
a massive, massive basket of eggs into the 3AC
basket. Seemingly, yeah. The concentration risk
was off the charts. So in June 2022, when the
market turns and 3AC blows up, Voyager comes
out and says, hey, remember that hedge fund?
Yeah. They owe us $666 million and they ghosted
us. That has to be the moment the alarm bells
started ringing in every boardroom in the industry.
Why? Because if a borrower defaults on that size
of a loan, the lender Voyager doesn't have the
liquidity to pay their own customers if they
want to withdraw their money. It creates a liquidity
crisis instantly. It's a bank run waiting to
happen. Absolutely. If I hear that news, the
first thing I do is open the app and hit withdraw.
And if everyone does that at once and the money
isn't there because it vanished with 3AC. The
game is over. The game is over. And that leads
us right into the nightmare scenario for the
users. Right. Part three. The week of collapse
is July 2022. Yeah. And looking at the dates
and the records, it happened so fast. It wasn't
a slow bleed. It was a guillotine. It was incredibly
rapid. The default announcement regarding 3AC
was late June. Then we get to July 1st. July
1st. The freeze. The source says Voyager suspended
three things. Trading, deposits. and withdrawals
which is the trifecta of game over for a financial
platform you can't put money in you can't move
money around and you can't take money out it's
a trap Your money is officially trapped. They
also suspended loyalty rewards. Yes, that detail
always sticks out to me. It seems so trivial
compared to the billions lost, but it speaks
to the psychology of the whole scheme. It's just
adding insult to injury, isn't it? Talk to me
about these loyalty rewards. What was the point
of them? It was gamification. It was a way to
lock you in. They had their own token, VGX. Ah,
the platform token. Exactly. And they created
tiers. Hold more Voyager token and we'll give
you a boost on your interest rate. or get more
rewards. So it incentivized people to not only
keep their money on the platform, but to buy
the company's own, you know, made up currency.
Precisely. It locked people in emotionally and
financially. It made them feel like they were
part of a club getting a special deal. So imagine
being a user. It's Friday morning, July 1st.
You check your app. You have your Bitcoin, your
Ethereum, and you have these loyalty points racking
up because you're a navigator or what are they
called? The top tier. Yeah, some cool sounding
name. You feel smart. you feel wealthy and suddenly
boom the screen says trading suspended it is
the digital equivalent of showing up to your
bank branch and finding the windows boarded up
and a padlock on the door oh that's a good analogy
the panic that sets in at that moment is indescribable
you realize those numbers on the screen might
just be pixels not property And the speed from
that suspension to the formal legal filing was
practically a blink of an eye. It was. They didn't
even try to limp along for months. No. July 5th,
2022, just four days after the freeze. Over a
holiday weekend, no less. Wow. Voyager files
for Chapter 11 bankruptcy protection. Now, you're
the expert here. We hear Chapter 11 a lot in
corporate news. It usually means reorganization,
right? Right. Like, we made a mistake. Give us
a minute to restructure our debt and we'll be
back in business. Airlines do it all the time.
Theoretically, yes. Chapter 11 is designed to
allow a company to pause its debts, negotiate
with creditors, and continue operations. It's
distinct from Chapter 7, which is immediate liquidation
selling everything for scrap. So why did that
work here? In the crypto world, Chapter 11 is
often a waiting room for death. Why is that?
Why couldn't they just reorganize? Because their
core business was trust. An airline can file
Chapter 11 and you'll still fly with them because
you know the plane will still take off. You trust
Boeing or Airbus, not necessarily the airline's
accountants, but a bank. or a crypto brokerage.
Once you lock the doors and tell people we lost
your money, the trust is vaporized. Nobody is
ever going to deposit a single dollar with you
again, ever. So even though they filed for protection,
they were a zombie company walking. Exactly.
And looking at the header of our source material,
the ultimate fate of the company is listed as
liquidation. There was no coming back from a
$666 million hole when your reputation is destroyed.
But the bankruptcy filing was just the beginning
of the bad news for the customers. Because once
the regulators, who had been suspiciously quiet
during the boom years, started looking under
the hood. Yeah, once they finally woke up. They
found something arguably worse than just bad
debts. They found lies. This is the part that
turns this from a story of, you know, incompetence
into a story of deception. We're talking about
the regulatory hammer. Late July 2022. Yes. We
see intervention from two heavy hitters, the
Federal Reserve and the FDIC. The FDIC? The Federal
Deposit Insurance Corporation. For our listeners
who aren't finance nerds, explain why seeing
the FDIC involved here is such a big deal. The
FDIC is the bedrock of American banking. It's
the reason you don't panic when you hear a bank
is struggling. They guarantee that if a bank
fails, the government will pay you back up to
$250 ,000. It is the gold standard of safety.
It's what separates a real bank from, well, a
crypto app. And Voyager had been using that name,
hadn't they? They had. And the regulators were
not happy about it. They sent a joint letter
ordering Voyager to cease and desist. Doing what?
From making false and misleading statements.
Specifically, statements about U .S. banking
insurance. Okay, let's pause on this because
this is huge. It is. This changes the narrative
completely. It goes from Voyager made a bad business
bet on 3AC to Voyager was lying to its customers.
What exactly were they telling people? The implication
from the records is that Voyager used language
suggesting that customer funds held on the platform
were FDIC insured. So my Bitcoin was FDIC insured?
No, but they made it seem like the cash you held
there was, they would say things like, your USD
is safe or Voyager is FDIC insured. But were
they? No. And here is the nuance. It's a very
clever, very deceptive trick. Voyager had a partner
bank, Metropolitan Commercial Bank, that was
FDIC insured. Okay. When you sent dollars to
Voyager, they put those dollars in an omnibus
account at that bank. That specific account was
insured if the bank failed. Okay, so if Metropolitan
Commercial Bank went under, the money was safe.
Correct. But what if Voyager went under? That
insurance did not apply if Voyager failed. which
is exactly what happened. The FDIC insurance
provided zero protection to the end user. But
Voyager's marketing blurred that line intentionally.
They used the FDIC logo. They made customers
feel like the government was backing their crypto
app. That is incredibly manipulative. You have
customers who might have been skeptical of crypto,
but they thought, well, even if this company
is sketchy, my cash is insured like it is at
Chase or Wells Fargo. The website says FDIC.
And that's exactly the person they were preying
on, the person looking for that little bit of
reassurance. And then the Fed comes out and says,
no, that is false. Stop saying that. It is a
massive betrayal of trust. It explains why people
might have kept their life savings on the platform
even as rumors started swirling. They thought
they had a safety net that simply did not exist.
It's like buying a car because it has an airbag
crashing and finding out the airbag was just
a painted balloon. That is a perfect and tragic
analogy. Yeah. So now we are in late July. The
company is bankrupt. The regulators are yelling
fraud or at least misleading practices. The customers
are locked out. Is there any good news? Was there
any relief at all? Well, there is a glimmer,
a faint glimmer. This brings us to August 2022.
Okay, what happened in August? The records mention
a court order. A judge approved returning cash
to customers. Cash, okay. Yes, the amount approved
was $270 million. $270 million. On the surface,
that sounds like a lot of money. If you tell
me I'm getting a share of $270 million, I'm feeling
okay. It is a large sum in isolation. However...
Context is everything. The records explicitly
state that this money accounted for only a small
portion of total investor funds. A small portion.
So if you had $10 ,000 on Voyager, maybe you
got, what, a few hundred bucks back? It depends
on how you held it. This highlights a critical
distinction we need to make for the listener.
The difference between cash... and crypto assets
in a bankruptcy, they are treated completely
differently. Right. Break that down for us. The
$270 million was likely the U .S. dollars sitting
in that pass -through account we talked about,
the one at Metropolitan Commercial Bank. Okay.
Because it was just cash sitting in a bank, the
judge ruled it belonged to the customers. It
wasn't really Voyager's property, so they could
give it back. So if I had sold my Bitcoin on
June 30th and just had cash sitting in the app,
I might have gotten lucky and gotten all my cash
back. Potentially. But if you had Bitcoin or
Ethereum or USDC or that Voyager token, that
is not cash. That is an asset. And in the eyes
of the bankruptcy court, when you deposited that
crypto into Voyager, you effectively gave them
ownership of it in exchange for an IOU. You gave
them a loan. You gave them an unsecured loan.
You became an unsecured creditor. So that crypto
wasn't mine anymore. It belonged to the company.
It became part of the bankruptcy estate. It was
trapped. It was theirs to lose, basically. So
the relief was basically just giving people back
the change they left on the counter while the
store kept the expensive merchandise they bought.
That is a cynical but likely accurate assessment.
And the vast majority of the value people thought
they had, the billions of dollars, was in those
crypto assets, which were now locked in a legal
battle. OK, so the company is dead. The customers
got pennies on the dollar or at least the cash
customers got their cash and the crypto customers
got nothing yet. Nothing yet. Now we have a dead
carcass of a company. What happens to it? We
enter the auction phase. The liquidation process
usually involves selling off whatever assets
are left. the customer list, the technology,
and of course, the remaining crypto to the highest
bidder to pay back the creditors. And this brings
us to, I think, the most dramatic part of the
story, the bidding war. It's incredible. Honestly,
looking at this timeline, it plays out like a
comedy of errors or maybe a tragedy of errors.
It really does. It's almost Shakespearean in
its absurdity. We are in September 2022 now.
Two months after the bankruptcy filing. The customers
are desperate. They just want someone, anyone,
to buy the company so they can get their crypto
back. Who steps into the ring? We have two titans
of the industry at the time. The two biggest
names in the world, Binance and FTX. Binance
and FTX. It's like Godzilla and Kong fighting
over a ruined city. It really was. The two giants.
What were the bids? The records note that both
made bids of nearly $50 million. $50 million.
Okay, wait. We're talking about a $666 million
hole. We're talking about billions in assets.
Why is the bid only $50 million? That seems...
tiny it does but it's a bit misleading that 50
million dollars is likely just the premier that
cash payment to the company for the right to
take over oh okay the winner would also have
to agree to pay back the customers using the
remaining assets on the platform so the 50 million
dollars was just the entry fee essentially the
real cost was making the customers whole or as
whole as possible got it that makes more sense
so who won godzilla or kong The winner was FTX.
Reference number eight confirms it. FTX wins
auction for bankrupt crypto broker Voyager Digital's
assets. FTX wins. Sam Bankman -Fried. SBF. The
man with the afro who is on the cover of Forbes.
He comes in to save the day. The white knight
of crypto. That was a narrative in September
2022. Absolutely. He was bailing out BlockFi.
He was bailing out Voyager. He was positioning
himself as the JP Morgan of crypto, the lender
of last resort. The customers must have felt
a huge wave of relief. OK, FTX is huge. They
have Super Bowl commercials. Tom Brady likes
them. My money is finally safe. I'm going to
be made whole. There was a lot of optimism. A
transition plan was put in place. Customers were
told to prepare to move their accounts to FTX.
The end was in sight. And then November happened.
Yes. The plot twist to end all plot twists. November
2022. FTX files for bankruptcy. You cannot make
this up. It's unbelievable. A company that won
the auction to bail out Voyager. The company
that was supposed to be the safe pair of hands.
goes bankrupt in a fraud scandal even bigger
than voyagers talk about bad luck i mean from
the customer's perspective it's just a cosmic
joke or maybe just bad due diligence i mean the
whole industry was a house of cards but yes voyager
is sitting there thinking they are saved and
their savior literally drops dead of a heart
attack right in front of them so what happened
to the deal The deal was voided instantly. It
put the entire bailout in jeopardy. And for the
customers, this must have been excruciating.
It's emotional whiplash. You go from, I lost
everything in July, to I'm getting it back in
September, to, oh God, the Savior is a fraud
too in November. It's a nightmare. And the financial
impact was massive. The records mention a major
investor stated that the FTX meltdown threatened
$1 .3 billion of investor assets. Wait, $1 .3
billion? Where did that number come from? That
likely represents the total market value at the
time of the crypto assets that Voyager still
held. The pot of money that was supposed to be
distributed. So that's the customer's money.
That's the customer's money. The idea was that
FTX would take those assets and distribute them.
When FTX collapsed, that $1 .3 billion was suddenly
in limbo again and at risk of getting dragged
into the FTX bankruptcy mess. That is a massive
number. We were talking about the $270 million
in cash returned earlier. The gap between $270
million and $1 .3 billion. That is the pain gap
for the customer. That is the money that is stuck.
Exactly. And now Voyager is back to square one.
Worse than square one because now the whole industry
is radioactive. So FTX is out. The carcass is
back on the market. Who is left? Who would even
want to touch this now? Round two. We move to
December 2022. Okay. And the other bidder comes
back to the table. Binance. They lost the first
time, but now the winner is dead, so they step
up. Specifically, Binance .us, the American subsidiary,
they win the new bid. And what is the price tag
this time? The records say approximately $1 billion.
Now, we need to clarify this number because it
sounds huge compared to the $50 million we heard
earlier. Yeah, it does. This $1 billion figure
likely refers to the valuation of the assets
Binance. U .S. agreed to take on and distribute.
It doesn't mean they wrote a check for $1 billion
to the Voyager executives. It means they agreed
to manage the $1 billion pot of remaining crypto
and get it back to the users. Okay, that makes
sense. So a $1 billion deal is on the table.
Binance .us is going to take over. Customers
are thinking, okay, third time's the charm. Binance
is the biggest exchange in the world. Sure. this
will work. You would think so. You would think
the pain is finally over. I feel a butt coming.
Remember the regulatory theme we touched on earlier?
The government was waking up and they were angry.
Oh no, don't tell me. January 2023, the final
hurdle. The SEC. The U .S. Securities and Exchange
Commission files a limited objection to the acquisition.
Why? Why would they stop a deal that would help
customers get their money back? The customers
are bleeding out and the SEC says, stop the ambulance.
It's a complicated legal argument, but essentially
the SEC was worried about the legality of how
Binance .US operated. They question whether their
plan for redistributing the assets constituted
the sale of unregistered securities. So they
were protecting the consumers by preventing the
consumers from getting their money. That is the
paradox of regulation in a crisis. The regulators
want to ensure the law is followed, but enforcing
the law strictly often means freezing the assets
indefinitely. So they didn't trust Binance. They
did not. And after the FTX debacle, where the
regulators looked completely asleep at the wheel,
they weren't going to rubber stamp anything.
They were going to object to everything. It's
just hurdle after hurdle. You survive the fraud.
You survive the bankruptcy. You survive the fake
savior. And then the government steps in and
blocks the real savior. It creates a state of
permanent limbo for the users. And that brings
us to the end of the timeline provided in our
records. We end on a cliffhanger, essentially.
January 2023, the SEC is objecting. And the final
fate listed in the source header is liquidation.
Which means, in the end, nobody really bought
it. They just had to sell it all off for parts.
It seems that way. The rescue missions failed.
Let's zoom out. I want to look at the big picture
here. Because when you stack all these events
up, the timeline is breathless. It's just one
catastrophe after another. It is. Let's just
run through it one more time to feel the weight
of it. 2018. Founded. A New York dream. September
2021. Top of the world. Listed on the Toronto
Stock Exchange. Peak bull run. June 2022. The
$666 million hole with 3AC. The betrayal. The
beginning of the era. July 2022. Bankruptcy and
the FDIC fraud warning. The lockdown. Yep. August
2022. Customers get a tiny bit of cash back.
270 meters. But the crypto is stuck. A sliver
of hope. September 2022. FTX wins the bid. Hope
returns. The false star. November 2022, FTX dies.
Hope dies. Utter chaos. December 2022, Binance
.us wins the bid. Another chance. January 2023,
the SEC objects. And the whole thing grinds to
a halt again. It is a relentless cascade of failure.
Every single failsafe that is supposed to exist
in a financial market failed. How do you mean?
Due diligence failed. They lent half a billion
dollars to a single entity. Diversification failed.
Insurance fail. Or rather, the claims about it
were false. Bankruptcy protection failed to make
people whole. Even the rescue acquisitions failed.
It's a total system failure. And what strikes
me, going back to the very beginning of our conversation,
is that information gap we talked about. The
missing years. The missing years. The years that
the source flags as missing info. Right. We have
this high -definition, day -by -day account of
the death of Voyager. But the life of Voyager,
the years 2018, 2019, 2020, is a black box in
this source. It is fascinating to speculate on
what was happening in that black box because
we can sort of deduce it from the crash scene.
How so? You don't get to a $666 million unsecured
loan to a single borrower overnight. That level
of risk appetite is learned. It's a culture.
It suggests that during those missing years,
they were likely taking bigger and bigger risks
and getting away with it. because the market
was going up. It's the survivor bias. They probably
made risky loans in 2020 that paid off handsomely.
They made risky loans in 2021 that paid off even
more. Of course. So they thought they were geniuses.
Exactly. We're invincible. We're New York's finest.
They likely mistook a bull market for skill.
They mistook luck for genius. So when 3AC came
knocking for half a billion dollars, they didn't
see a risk. They saw another easy win. They saw
the biggest score yet. It's like driving a car
at 100 miles per hour. As long as the road is
straight, you feel like a great driver. You feel
totally in control. Yeah, you feel like a professional.
You only realize you're going too fast when the
curve comes. And June 2022 was a hairpin turn
for the entire market. So bringing this all together
for our listener, why does this story matter?
Aside from the... you know morbid curiosity of
watching a billion dollars burn voyager digital
is the perfect case study because it exposes
the lie of safe crypto what do you mean by that
Voyager wasn't marketed to the degens or the
hardcore traders. It was marketed to regular
people, your uncle, your neighbor. It was the
safe, publicly traded, insured option. It was
supposed to be the on -ramp for the average person.
Exactly. And it turned out to be just as dangerous
as the wildest casino in the Bahamas. Perhaps
more dangerous. Why is that? Because people lowered
their guard. If you go to a casino, you know
you might lose. With Voyager... You thought you
were investing. That is a very, very good point.
And I think the key takeaway for me is the interplay
between cash and assets that we discussed. The
$270 million versus the $1 .3 billion. It highlights
a fundamental truth that I think everyone needs
to understand. Even now, money in a bank account
is property. It's yours. Right. Crypto assets
held on a brokerage platform are often just an
unsecured loan to the company. It's the difference
between having cash in your wallet and having
a betting slip in your pocket. That's it. One
is money. The other is a claim on potential value.
Precisely. And when the house goes bust, the
betting slip is just a piece of paper. That is
a sobering thought. And it raises a final provocative
question about the regulators, doesn't it? It
does. We saw the SEC object to the Binance deal.
The regulators stepped in to stop the rescue.
The question is, if the regulators intervene
to stop the recovery of assets because of compliance.
Who are they actually protecting? Right. Are
they protecting the consumer from future harm
by making sure Binance follows the rules? Or
are they just ensuring that the consumer stays
at zero by blocking the only viable path to recovery?
When a company like this fails, who actually
owns the wreckage? Is it the creditors? The new
buyer? Or is it the government regulators who
get to decide who is allowed to buy it? And while
they fight over that question in courtrooms for
years, the customer is the one waiting outside
the locked doors. Still checking their app, seeing
maintenance mode, and knowing their loyalty rewards
are gone forever. Well, on that cheerful note,
seriously, though, thank you for unpacking this
with me. It is a dense, painful story, but I
think understanding Voyager really helps you
understand the whole 2022 crisis. It really does.
It wasn't just bad luck. It was bad structure.
It was a failure from top to bottom. It was a
house of cards built on a foundation of trust
me, bro. And when the wind blew, it all came
down. And thanks to all of you for listening.
Hopefully your assets are safe and sound and
you've checked your custody agreements. Thanks
for taking the deep dive with us. Until next
time.