Voyager Digital, a high US cryptocurrency broker and lender has filed for bankruptcy following the current crypto market crash. This comes following the suspension of withdrawals, trading, and deposits on its platform.
It announced that the market “volatility and contagion” had forced it to file for chapter 11 which protects the company from its creditors while they explore strategic alternatives. They said in the filing that they have between $1 billion and $10 billion in assets and over 100,000 creditors.
Since last November, the market has dropped from $3tn (£2.5tn) to less than $1tn, with most of the decline happening in May when Terra collapsed. It was known that Voyager owed $75 million to Sam Bankman-Fried’s Alameda Research which was disclosed in the filing. Meanwhile, Voyager didn’t disclose other firm to which it owes money.
The crashing market also caused some difficulties to Three Arrows Capital which owed Voyager money and was lined up for liquidation as of last week. Chief Executive Officer of Voyager, Stephen Ehrlich wrote:
“Voyager’s platform was built to empower investors by providing access to crypto asset trading with simplicity, speed, liquidity, and transparency. While I strongly believe in this future, the prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now. The chapter 11 process provides an efficient and equitable mechanism to maximize recovery”
A professor of finance at the University of Sussex business school, Carol Alexander had said that Voyager’s problems could be attributed to the crypto credit crisis but also argued that it was not a bad thing at this point.
Three Arrow Capital didn’t just owe Voyager, it owed several other companies a large sum of money. BlockFi (a crypto lending platform) was also a victim. They had exposure to 3AC and struggled to clear their debts after the collapse of the hedge fund and later agreed to be acquired for up to $240 million last week by FTX’s U.S. arm.
Voyager stated in the press release:
“Voyager is actively pursuing all available remedies for recovery from 3AC, including through the court-supervised processes in the British Virgin Islands and New York.”
They promised to be operational during the reorganization, Meanwhile, trading, deposits, and withdrawals on the platform remain suspended. See Ehrlich’s tweet below:
“During the reorganization, we’ll maintain operations. We intend to certain customer programs without disruption. Trading, deposits, withdrawals, and loyalty rewards on the Voyager platform remain temporarily suspended.”