Crypto Contagion continues to lend Voyager digital files for bankruptcy
The cold winds of the crypto winter continue to blow. On Tuesday, cryptocurrency lender Voyager Digital filed for bankruptcy, becoming the last cryptocurrency company to falter since the market began to crash in April. Voyager Digital is a platform for buying, trading and lending, and is estimated to have between $ 1 billion and $ 10 billion in both assets and liabilities.
Voyager Digital’s CEO, Stephen Ehrlich, said in the submission that the company’s poor financial condition was caused by two problems. First, high inflation and rising interest rates has caused cryptocurrencies to dumpwith bitcoin down 60% from its record high in 2021. Second, Three Arrows Capital, a crypto hedge fund, defaulted on a $ 650 million loan issued by Voyager in March.
It is an example of the contagion effect that has helped drive down crypto in recent months. The infection began with Luna, a cryptocurrency that collapsed in May after its associated TerraUSD stablecoin was unveiled. This crash wiped out around $ 14 billion from the market, inflicting heavy losses on companies holding TerraUSD and Luna. Singapore-based Three Arrows Capital is one such company. The hedge fund filed for Charter 15 bankruptcy last week – just days after Voyager Digital issued a $ 650 million default notice it had borrowed 3AC.
In recent weeks, Peter Thiel-backed cryptocurrency lender Vauld has suspended withdrawals, cryptocurrency broker Genesis is said to have lost hundreds of millions due to the bankruptcy of 3AC, and news that a Korean investment fund lost 99% of its clients’ funds due to the Luna collapse.
Three Arrows Capital managed a fund estimated to be worth $ 10 billion back in March, Fortune reported. Three Arrows Capital was contacted for comment, but did not respond immediately.
While 3AC is in the process of legal proceedings, Voyager Digital’s executives hope that the bankruptcy petition is the first part of a turnaround operation. Chapter 11 bankruptcy proceedings allow companies to plan restructuring and snuff strategies while protecting them from civil litigation. New Jersey-based Voyager Digital was listed on the Toronto Stock Exchange before trading in the shares was suspended following the bankruptcy announcement.
“This is not a ‘free fall’ archive without direction,” the archive states. “On the contrary, Voyager has a way forward and a plan to quickly bring these Chapter 11 cases to an appropriate conclusion.” A plan outlined by Ehrlich, subject to change and pending legal approval, will see Voyager customers with crypto in their wallets receive revenue from 3AC’s ecovery, shares in the reorganized Voyager Digital company, as well as Voyager crypto tokens.
Voyager Digital’s bankruptcy announcement comes days after it suspended withdrawals and trading on its platform last Friday.
