Voyager said it has approximately $ 1.3 billion in encryption on its platform and that it has more than $ 350 million in cash on behalf of customers of the Metropolitan Commercial Bank of New York.
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The harassed cryptographic brokerage Voyager Digital has sought protection from the failure of Chapter 11, becoming the latest victim of chaos in the digital asset markets.
Voyager on Tuesday filed for bankruptcy in the U.S. Bankruptcy Court in the southern district of New York, according to a company document. The presentation lists assets between $ 1 billion and $ 10 billion and liabilities in the same range.
In a statement, the company said it has approximately $ 1.3 billion in crypto on its platform and that it has more than $ 350 million in cash on behalf of customers of the Metropolitan Commercial Bank of New York.
Voyager suffered heavy losses from its exposure to cryptocurrency hedge fund Three Arrows Capital, which went bankrupt last week after defaulting on loans from a number of companies in the sector, including $ 650 million from Voyager.
“We strongly believe in the future of the industry, but the prolonged volatility in the crypto markets and the default of Three Arrows Capital, force us to take this decisive action,” Voyager CEO Stephen Ehrlich said in a tweet Wednesday in the early hours.
Shares of the Toronto-listed firm have lost nearly 98% of their value since early 2022.
Voyager says it is still seeking the recovery of funds from Three Arrows Capital, or 3AC, as it is known, even through court-supervised proceedings in the British Virgin Islands and New York.
Last week, Voyager paused all withdrawals, deposits and trading on its platform due to “current market conditions”. At the time, Ehrlich said Voyager was looking for extra time to explore “strategic alternatives with various stakeholders.”
Several other companies, such as Celsius, Babel Finance and Vauld, have taken similar steps. On Tuesday, Vauld received an offer to acquire Nexo, a rival company, after suspending its services.
The crypto market is facing a severe liquidity crisis as platforms struggle to cope with a large number of customer withdrawals amid a sharp drop in digital currency prices.
Cryptography’s falls began with a broad fall in risky assets when the Federal Reserve embarked on a monetary tightening and picked up pace after the collapse of Terra, a so-called stable currency company that was worth about 60,000 millions of dollars at its peak.
Bitcoin, the world’s largest witness, had its worst month on record in June, with a 38% drop. Investors are preparing for a much longer fall of digital currencies known as “crypto winter”.
Restructuring plan
Voyager said the move would allow it to implement a restructuring process so customers can be reimbursed.
If all goes according to plan, users will receive a combination of cryptocurrencies in their accounts, Three Arrows Capital fund recovery income, shares of the newly reorganized company and Voyager tokens.
Voyager said customers with U.S. dollar deposits will regain access to their funds once a process of reconciliation and fraud prevention with the Metropolitan Commercial Bank is complete.
Alameda Research, the retail store of billionaire Sam Bankman-Fried, had extended a $ 500 million cash and crypto line of credit to Voyager last month in a futile attempt to outperform the company.
Alameda was listed as Voyager’s largest creditor in the bankruptcy filing Tuesday, with an unsecured $ 75 million claim.
Bankman-Fried, which also founded the FTX cryptocurrency exchange, has become a lender of last resort for the troubled industry. He recently struck a deal that gave FTX the option to buy cryptocurrency lending company BlockFi for up to $ 240 million, a dramatic $ 3 billion reduction in which it was last privately valued. .
Some have compared Bankman-Fried’s efforts to the role played by John Pierpont Morgan in rescuing Wall Street lenders from collapse after a series of bank runs known as the 1907 panic, which preceded the creation of the Fed.