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Crypto broker Voyager recovers amid possible Three Arrows Capital loan default

Yahoo Finance's David Hollerith joins the Live show to discuss crypto broker Voyager amid the possibility of a 3AC loan default.

Video transcript

BRAD SMITH: They are moving this morning after the company said it may issue a notice of defaults to Three Arrows Capital if the hedge fund fails to make a loan repayment by the end of the month. You're saying that they're higher this morning by about 9%. We've got the details on this and everything crypto. David Hollerith in studio live in living color. We've got David.

OK, so I mean, broad strokes, it's down. But here today, reacting positively at least.

DAVID HOLLERITH: Right. I mean, what's going on here is Voyager had heavy exposure to three areas. Obviously, this embattled hedge fund that's taken heavy losses. And what we're seeing now essentially is they have a revolving loan of credit with Almeida Research, which, they're sort of the liquidity provider and sort of a trading firm that Sam Bankman-Fried, the CEO of FTX, founded but sort of managed separately.

And so they have credit right now to sort of bridge them over. But the situation, obviously, is whether or not they can retain any money back on their loans which amounted to $666 million as of yesterday in crypto, so Bitcoin and the stablecoin USD. And so the issue becomes whether or not they can retain it back.

And this issue of contagion with crypto companies is obviously something that everyone's been watching. And how much can be staved off by these larger players like Almeida and FTX and others is obviously a huge topic of concern. So everyone's paying a lot of attention to how Voyager can--

JULIE HYMAN: Yeah. I mean, and what just keeps striking me is how exposed Sam Bankman-Fried is in all of this, right?

DAVID HOLLERITH: Right.

JULIE HYMAN: He's lending money through FTX to BlockFi through another revolving loan. He's got this investment in Robinhood also. And I'm just thinking, if you think of this as a sort of mini financial crisis, and Sam Bankman-Fried is Warren Buffett, I mean, either he comes out looking like Warren Buffett, or he comes out losing all of that. I mean, what's the sort of buzz in the industry now about this growing exposure that he has?

DAVID HOLLERITH: Yeah, absolutely. I mean, the Warren Buffett comparison is interesting because he also has this heavy effective altruism side of his personality. But I think that, yeah, it's hard to actually understand how much money he has, how much crypto exposure he has in his wealth.

Obviously, his share stake in Robinhood was hit pretty hard recently. He's not the only large player. He's just the one that's come out at the beginning of this week vocally about it. But I think it's fair to assume that Bankman-Fried has decided, made the decision that, whatever happens to the crypto sector writ large right now is sort of like going to reflect his future. So I think he's going to do as much as he can to support these firms, especially ones they do business with.

BRAD SMITH: Yeah. We were taking a look at some of the price action today on cryptos. We can say relatively, it's muted here on the day. We know that there's a witching that's also going to be taking place too this week. And so that might be in focus as well, as Bitcoin is just barely down right now. It's good to have you in studio with us for the time here, David. Appreciate the breakdown.

DAVID HOLLERITH: I do have legs.

BRAD SMITH: Yes, indeed.

[LAUGHS]