Crypto Broker Voyager Digital Goes Bankrupt
United States-based cryptocurrency brokerage company Voyager Digital has run out of road. After suspending trading, deposits, and withdrawals last Friday, the firm has now commenced a voluntary Chapter 11 bankruptcy process.
Voyager Files for Bankruptcy
The crypto broker submitted the paperwork to the U.S. Bankruptcy Court of the Southern District of New York on Tuesday. If the restructuring goes according to plan, the firm aims to return value to its customers and shareholders.
“This comprehensive reorganisation is the best way to protect assets on the platform and maximise value for all stakeholders, including customers,” Stephen Ehrlich, CEO of Voyager, said.
Since its launch in 2018, Voyager has worked to become one of the leading cryptocurrency brokerage firms in the United States. However, things became difficult for the company after the cataclysmic fall of the Terra LUNA blockchain project induced a massive and prolonged market selloff.
3AC Defaults on $670M Loan to Voyager
While the crypto broker had no direct exposure to Terra before the crash, one of its clients, Three Arrows Capital (3AC), a crypto hedge fund, invested in the project. 3AC has become insolvent and cannot repay the $670 million it borrowed from Voyager.
Last week, the brokerage company issued a notice of default to 3AC intending to pursue recovery from the troubled venture capital firm. Shortly after, Voyager temporarily suspended trading, withdrawals, and deposits, noting that the decision would give it time to “continue exploring strategic alternatives with various interested parties.” However, the lack of sufficient capital has led Voyager to the bankruptcy court.
The firm’s Chapter 11 filing reveals that it has more than 100,000 creditors with assets and liabilities worth between $1 billion and $10 billion. The court document also shows that Alameda Research, the principal trading firm of Sam Bankman-Fried, has the largest unsecured claim amounting to $75 million.
Meanwhile, the brokerage firm is not the only crypto company that has filed for bankruptcy since the start of the crypto winter. Last week, Voyager’s debtor 3AC submitted a court paper for Chapter 15 bankruptcy after becoming insolvent.
