Crypto Broker Voyager digital files for chapter 11 bankruptcy

Crypto broker Voyager Digital Ltd. has filed for Chapter 11 bankruptcy in the US Bankruptcy Court in the Southern District of New York.

According to the filing, Voyager’s estimated assets are between $ 1 billion and $ 10 billion, with between $ 1 and $ 10 billion in estimated debt. The Toronto-based firm estimates more than 100,000 creditors.

Last Monday, Voyager issued a default warning to the beleagured Singapore-based crypto hedge fund Three Arrows Capital (3AC), which had borrowed $ 675 million from Voyager in the form of $ 15,250 bitcoin and $ 350 million in stackecoin USDC.

“While I have great faith in this future, the long-standing volatility and contagion of the crypto markets in recent months, and the default of Three Arrows Capital, require that we take conscious and decisive action now,” Voyager CEO Stephen Ehrlich said in a statement released late. Tuesday. “The Chapter 11 process provides an efficient and equitable mechanism for maximizing recovery.”

3AC’s problems came in the middle of a week-long sale in the digital asset market, exacerbated by the collapse of 60 billion dollars of algorithmic stackcoin TerraUSD (UST) and the sister cryptocurrency Luna last month. Three Arrows Capital, which had approximately $ 3 billion in assets under management in April this year, had around $ 200 million in Luna and at least $ 40 million in staked ether (stETH), a derivative of Ethereum’s original cryptocurrency, ether, which also led tap.

In addition, 3AC had allegedly placed a handover bet on the Grayscale Bitcoin Trust (GBTC) to arbitrate the difference between the value of the trust and bitcoin. GBTC shares have been trading at a discount since February 2021, which recently increased to about 30%, according to YCharts.

When the Three Arrows failed to meet margin calls, Voyager secured credit lines from the investment arm of Alameda Research, the trading company founded by billionaire CEO of the cryptocurrency exchange FTX, Sam Bankman-Fried and Voyager’s major investor (In May, the broker raised $ 60 million in a private placement led by Alameda. Other participants included Galaxy Digital, Blockdaemon and Digital Currency Group). The two lines of credit provided by Alameda Ventures, $ 200 million in cash and USD Coin and $ 15,000 bitcoin, are due to expire at the end of 2024 and have an annual interest rate of 5% paid at maturity.

Voyager said it had about $ 137 million in cash and owned cryptocurrencies as of June 24. The following Monday, the firm revealed that it had used $ 75 million of Alameda’s loans to facilitate customer orders and withdrawals, and engaged investment bank Moelis & Company as financial advisors. Sources familiar with the matter said that Alameda Ventures does not expect to get that capital back. told Sam Bankman-Fried Forbes in an exclusive interview, “You know, we’re willing to make a little bad deal here, if that’s what it takes to stabilize things and protect customers.”

Other crypto companies that had lent capital to 3AC are also struggling to stay afloat. According to a CoinDesk report, Goldman Sachs wants to raise $ 2 billion from investors to buy distressed assets from Hoboken-based cryptocurrency lender Celsius. Earlier this month, Celsius contacted restructuring lawyers from Akin Gump Strauss Hauer & Feld and Citigroup to advise on possible solutions. On July 1, FTX and cryptocurrency lender BlockFi entered into an agreement that would give FTX an option to buy BlockFi for what was described as a “variable price” that could go as high as $ 240 million.

This is a development story