Voyager Digital has called for protection against the bankruptcy of the US, the latest victim of the sharp fall in cryptocurrency prices that has caused a crisis in the digital asset market.
The Toronto-listed broker and lender filed for Chapter 11 bankruptcy Tuesday afternoon in New York federal court after suffering losses of more than $ 650 million in a loan to Three Arrows Capital, the failed cryptocurrency investor.
The collapse of Voyager occurred less than a week after it suspended trading and prevented customers from withdrawing funds.
Singapore-based Three Arrows, which was known for its aggressive betting because cryptocurrency prices would rise, had borrowed heavily from major industry players to increase its market stakes, leaving it severely below the market. water as digital token prices dropped. The prices of major cryptocurrencies have fallen by about 70 percent from their high at the end of last year.
The company went bankrupt despite a bailout loan last month from Alameda Research, the trading company controlled by FTX founder Sam Bankman-Fried. Voyager had withdrawn the maximum $ 75 million allowed in a single 30-day period, making Alameda its largest unsecured creditor, bankruptcy filings showed.
The collapse of Voyager will be felt more widely, as the company had a large customer base among DIY cryptographic investors. At the end of March, its liabilities amounted to $ 5.7 billion. The Chapter 11 petition seeks to offer Voyager protection from legal claims while pursuing a restructuring.
The company said in the filing that it has more than 100,000 creditors and liabilities of between $ 1,000 and $ 10 billion. It owes nearly $ 1 million to Google, the documents showed, and the rest of its largest unsecured creditors are customers.
Voyager said it had $ 110 million in cash and “proprietary cryptographic assets” on hand, plus $ 1.3 billion in cryptographic assets on its platform.
Subject to court approval, it expects to pay customers with “a combination” of cryptocurrency assets, the proceeds of the bankruptcy of Three Arrows, the company’s shares when it returns from insolvency and the “Voyager tokens” .
The company said it also has $ 350 million in cash from customers in U.S. dollar deposits in a bus account at the Metropolitan Commercial Bank in New York. Customers will be reimbursed after “a process of reconciliation and fraud prevention,” he said.
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Metropolitan said the funds its Voyager customers had were protected by U.S. federal deposit insurance, up to $ 250,000 per depositor for each category of account ownership. The account does not contain cryptocurrency or any other assets, he added. Voyager said in the past that the FDIC would reimburse “USD funds” in the event that “the company … fails.”
Stephen Ehrlich, CEO of Voyager, said after the presentation that “we firmly 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 make this decisive decision. action. ”
The fall has also affected New Jersey-based lender Celsius, which has frozen customer withdrawals, and rival BlockFi, which also lent money to Three Arrows and obtained an FTX rescue loan from the stock exchange. the right to buy the company.
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