Voyager Digital filed for bankruptcy, a week after it suspended withdrawals, trading, and deposits. The crypto lender, in its Chapter 11 bankruptcy filing, stated that it had more than 100,000 creditors. Voyager has about $1 billion – $10 billion in assets and liabilities. The bankruptcy filing has put on hold all civil litigation matters. It allows companies to prepare turnaround plans.
Stephen Ehrlich, Voyager CEO, in an official statement, said the prolonged volatility and contagion in the crypto markets, and the default of Three Arrows Capital (3AC) on a loan from the company’s subsidiary – Voyager Digital LLC, prompted the company to take deliberate and decisive action. He told customers that the process would protect assets and maximize value for all stakeholders.
Moreover, the bankruptcy filing revealed that Alameda Research was Voyager’s largest single creditor. It had unsecured loans of $75 million. In October 2021, Voyager highlighted Alameda’s investment as a strategic alliance. Caroline Ellison, Alameda Co-CEO, had said the collaboration offered endless mutually beneficial opportunities to grow both businesses.
Last week, Voyager issued a notice of default to the Singapore-based 3AC for failing to repay the loan of 15,250 Bitcoin – worth $324 million, as well as $350 million worth of USDC. However, the crypto hedge fund filed for chapter 15 bankruptcy in the same week. This allows foreign debtors to shield US assets. Voyager stated that it had more than $110 million of cash and owned crypto assets on hand. The company plans to pay employees and continue with the primary benefits, as well as certain customer programs without disruption. Voyager has also hired Moelis & Company and The Consello Group as financial advisers; Kirkland & Ellis LLP as a legal adviser; and Berkeley Research Group LLC as a restructuring adviser, to get through the present challenging times.
Many crypto companies have suspended or limited withdraws due to the downturn in the global crypto market. Furthermore, the majority of companies’ problems are because they lost billions of dollars in TerraUSD’s collapse in May.