Cryptocurrency lending specialist Voyager Digital announced on Wednesday that it had filed for US bankruptcy protection, less than a week after freezing withdrawals on its platform. In a document filed Tuesday evening with the bankruptcy court for the Southern District of New York, the company says it has more than 100,000 creditors. Its largest debt (75 million dollars) was contracted with the investment fund Alameda Research, created by Sam Bankman-Fried, also at the head of the FTX virtual currency trading platform.
The estimated value of Voyager’s assets is between $1 billion and $10 billion. The estimated amount of its liabilities is in the same range, from 1 to 10 billion dollars. In the United States, recourse to Chapter 11 allows a company that can no longer repay its debt to restructure itself protected from its creditors, while continuing its current operations.
“Volatility and the Contagion Effect in the Crypto Market», Reasons for the bankruptcy of Voyager
“The vprolonged volatility and contagion effect in the crypto market over the past few months, as well as the payment default by Three Arrows Capital (»3AC«) of a loan from the company’s subsidiary, Voyager Digital, LLC, compels us to take this decisive and thoughtful step“, justified in a press release Stephen Ehrlich, the boss of Voyager.
At the end of June, the Singaporean alternative investment company Three Arrows Capital was unable to repay a loan of 350 million dollars and 15,250 bitcoins (about 310 million dollars) granted by Voyager.
A few days later, Voyager halted trading, deposits, withdrawals and loyalty programs. 3AC has since been liquidated but Voyager intends to recover its due. “The Chapter 11 procedure offers an efficient and fair mechanism to maximize the restart“, also assured Mr. Ehrlich. Voyager said it has immediate access to more than $110 million in cash and cryptocurrency assets and has $350 million in an account at Metropolitan Commercial Bank.
Cryptocurrencies in turmoil
Other cryptocurrency platforms specializing in lending have found themselves in turmoil in recent weeks and had to suspend withdrawals, including Celsius Network, CoinFlex and Babel Finance. These companies are suffering from the sharp drop in cryptocurrencies in a market that is not inclined to risky bets.
Bitcoin has lost more than half of its value since the start of the year and is currently trading just above $20,000. It was worth nearly $69,000 at its peak in November 2021.