08/07/2022
Voyager Digital, a crypto brokerage and lending business, has filed for legal protection, becoming the latest company affected by the domino effect of the cryptocurrency crisis following Three Arrows Capital.
Voyager Digital suspended withdrawals and trading on its platform last week amid market volatility and the crypto financial crisis. Voyager Digital LLC, Voyager Digital Holdings and Voyager Digital, Ltd. have now filed for Chapter 11 bankruptcy protection to safeguard the business during a strategic transition.
Chapter 11, or a Chapter 11 bankruptcy reorganization filing, is a legal process for restructuring a business’s finances. It involves seeking to reduce outstanding debt and repay it in installments over a certain period, in amounts the debtor company can afford based on its actual current ability to generate income.
The cryptocurrency market is currently in a bear market and has been highly volatile. Its total value fell from more than $3 trillion in November 2021 to approximately $1 trillion from early May 2022 onward. This represents a severe situation for crypto businesses, particularly following the collapse of Three Arrows Capital, which was unable to repay its debts and triggered further consequences for multiple companies across the crypto market.
Stephen Ehrlich said, “Given the recent volatility and crypto market contagion, and the default of Three Arrows Capital, this action will help strengthen the company as we work through a strategic transition. The Chapter 11 process is designed to protect assets on the platform for the benefit of all Voyager’s customers and other stakeholders.”
According to the Chapter 11 filing, a New Jersey court reported that Voyager Digital has more than 100,000 creditors and liabilities ranging from $1 billion to $10 billion. The filing indicates that the company believes it has sufficient assets and funding to repay its “unsecured creditors,” a category that includes Voyager Digital’s customers.
Voyager Token price over the one-year period from 2021 to 2022 (CoinMarketCap: July 8, 2022)
However, 3AC’s outstanding borrowings represented 60% of Voyager Digital’s total loans, amounting to more than $675 million. This consisted of 15,250 Bitcoin and $350 million in the stablecoin USDC. 3AC itself entered Chapter 15 bankruptcy proceedings on July 1 for businesses with operations in the United States and overseas (cross-border), allowing foreign businesses to protect their assets.
Source:
https://beincrypto.com/crypto-broker-voyager-digital-files-for-chapter-11-bankruptcy/
https://cryptoslate.com/voyager-digital-caves-and-files-for-chapter-11-bankruptcy/