Crypto broker Voyager Digital filed for bankruptcy on Tuesday in the wake of the collapse of major crypto hedge fund Three Arrows Capital (3AC). Voyager’s Chapter 11 filing comes just days after 3AC filed for bankruptcy — and nearly a week after 3AC default on loan Provided by Voyager.
in press releaseVoyager Digital states that it has approximately $1.3 billion in crypto assets on the platform, $110 million in cash and crypto assets on hand, and $350 million held in an FBO account (for clients). It also says 3AC still owes more than $650 million.
Voyager CEO Stephen Ehrlich blames the company’s financial difficulties on “long-term volatility and contagion in the cryptocurrency markets” as well as 3AC’s failure to repay its debt. “Operation Chapter Eleven provides an effective and equitable mechanism for maximizing recovery,” added Ehrlich.
Companies like Voyager Digital use a file Chapter 11 Filing When they plan to reorganize their debts while still working. Voyager Digital outlined the proposed course of action in its press release, noting that it would give customers a “mixture” of cryptocurrencies in their accounts, 3AC cashbacks, company stock, and Voyager tokens (which are currently worth about 21 cents each). The company says that customers who currently have US dollar deposits in their accounts will only regain access “after the settlement and fraud prevention process with Metropolitan Commercial Bank is completed.” This plan still needs court approval.
Voyager has paused all trading, withdrawals and deposits Last week after it was announced that 3AC had failed to repay its loan. In June, Sam Bankman-Fried, billionaire CEO of trading firms FTX and Alameda Research, Extended a $500 million credit line to Voyager in an effort to help it deal with an uncertain market. Bankman-Fried’s Alameda Research has also invested $75 million in Voyager last year, which a Chapter 11 filing lists as the company’s largest unsecured claim.
The cryptocurrency collapse shows just how intertwined crypto companies really are, with crypto lenders Celsius and Babel Finance temporarily shutting down before Voyager and 3AC filed for bankruptcy. earlier this week, Cryptocurrency Lending and Startup Fuld also suspended all transactionsbut it seems we have not yet seen how far the repercussions will reach.