Crypto broker files for Chapter 11
The Hits keep coming…
Yet another high-profile crypto firm is filing for bankruptcy. Right on the heels of Three Arrows Capital is Voyager Digital. The company has filed for Chapter 11 bankruptcy. The crypto crash continues to grow as companies are still reeling from the collapse of Terra and Luna back in May.
The collapse of TerraUSD sent a ripple that wiped out tens of billions in wealth from investors. The damage from that fall was compounded when the Celsius Network, another crypto lending firm, halted operations abruptly. This move exposed the crisis of liquidity faced by many other firms including Three Arrows Capital, Voyager, BlockFi, Genesis Trading, and Vauld.
The company, based in New York, took steps towards filing in the southern district of New York late yesterday July 5, 2022, along with its affiliates Voyager Digital LLC, and Voyager Digital Holding. The filing documents stated Voyager had up to $10 billion in assets but also had about that much in liabilities with more than 100,000 creditors attached. One of the creditors would be Sam Bankman-Fried, who attempted to aid Voyager by providing some lines of credit via Alameda Research. The filing listed that loan being unsecured and totaling $75 million which makes Alameda the biggest creditor on the Voyager declaration.
As the news of the bankruptcy passed through the crypto community the stock of Voyager saw a plummet of 11.93%. The company was also associated with Three Arrows Capital as the company spoke on the fact that it had a $661 million exposure to 3AC. Three arrows would eventually file for bankruptcy as it could not meet margin calls from several of its lenders. Voyager CEO Stephen Ehlrich stated that his company would also be affected due to the default of Three Arrows.
The question on those following the situation as to whether this signals the end of the company or not as Voyager paused all activity since last Friday has yet to be answered, but the company has stated it is now coming up with a “Plan of Reorganization”. This plan is meant to protect shareholders, resume access to accounts, and return value to customers. Ehrlich has promised that those customers that have crypto in their accounts will receive proceeds from the recovery of 3AC and common shares of the newly reorganized company with Voyager tokens included as well.
Customers that have USD deposits will be able to access those funds but only after a fraud prevention process is completed. This process will be handled by the Metropolitan Commercial Bank.