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Comment by Barrera | Hacker News Reader

> We are in discussions with various parties regarding additional liquidity and the go-forward strategy for the company. While we don’t have anything else to share today, we are working diligently and hope to have more information to share soon.

Translation: we are insolvent. The action we have taken prevents a run that will wipe out our working capital. We have been running a fractional reserve all along.

This is getting tedious.

Also: Voyager's alleged debtor, 3AC, just filed for Chapter 15 Bankruptcy:

https://www.bloomberg.com/news/articles/2022-07-01/crypto-he...

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Celsius made a similar statement nearly 3 weeks ago and there hasn't been any movement since then.

Well, there's been one really alarming movement: https://www.coindesk.com/business/2022/06/30/ftx-passed-on-d...

Didn't they also put in a big chunk of money into Celsius? 3AC + Celsius = 0 is going to hurt.

> We have been running a fractional reserve all along

How do you know that? It’s possible 3 Arrows missed their loan payments and that was enough to prevent them from meeting liquidity demands, no?

If loans were a component of Voyager's reserves, then by definition, Voyager was employing fractional reserve banking.

It's even more amusing that you think this crisis being caused by failed loan payments doesn't mean that fractional reserves are in play, because backing deposits with loans in lieu of cash is literally the textbook example used to illustrate fractional reserve banking.

Perhaps I just don’t understand fractional reserves.

The textbook example of fractional reserves:

You are a bank. Sally gives you $100, so now you have $100 in cash as assets. Bob comes up to and asks for $80. You agree to give him $80, on the condition that he gives you $90 next week. Now you have $20 in cash and a $90 loan backing your $100 liability to Sally. Because that $20 in cash is less than $100, you have fractional reserves.

Now, the real world is more complicated, because there's different definitions of cash and of liabilities, and even questions like "how much is this thing worth" can be very hard to pin down. But the basic idea of fractional reserves is that banks do not hold all of their reserves in cash.

And yes, the cryptocurrency industry does cater heavily to people who find the existing banking system abhorrent because it practices fractional reserve banking while practicing fractional reserve banking themselves, just far more quietly. (Indeed, a lot of the cryptocurrency industry is basically preying on people who are financially illiterate.)

Thank you.

>How do you know that?

The very first line on https://www.investvoyager.com:

>Build your wealth. Earn up to 12% annual rewards. Beat your bank by earning top rewards each month on 39 digital assets with no lockups.

Doing 12% APY when the fed funds rate was 0.5% meant they were loaning those deposits out at more than 13%. That's a pretty bad rate for a commercial loan. The only companies taking out those loans are doing so because they were rejected from regular banks. Why? Well now we know: it was all crypto hedge funds who were levered up and instantly imploded the minute crypto started to go down.

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