Cryptocurrency Lenning Company Voyager Files for Bankruptcy – BTC Direct

Voyager Digital has filed for bankruptcy in New York, according to a bankruptcy filing filed by the cryptocurrency company.

This is a so-called Chapter 11 type of bankruptcy petition. Chapter 11 bankruptcy proceedings stop all civil lawsuits and allow companies to draw up a recovery plan while they remain in operation.

More than 100,000 creditors

The company has between $ 1 billion and $ 10 billion in cryptocurrency assets on its balance sheet. On the other hand, they also have between $ 1 billion and $ 10 billion in estimated liabilities. It is expected that there will be more than 100,000 creditors.

Three subsidiaries

Three subsidiaries named Voyager Digital Holdings, Voyager Digital LLC and Voyager Digital, Ltd. seek protection. Bankruptcy petitions have been filed for each of these three companies in New York’s Southern District Bankruptcy Court.

According to these documents, the company is represented by Kirkland and Ellis LLP.

Voyager stopped firing Friday

The problems came up just before the weekend. Voyager stopped making withdrawals, deposits and trading crypto on Friday. They allegedly did so due to current market conditions.

“This was an extremely difficult decision, but we believe it is the right one given the current market conditions,” said CEO Stephen Ehrlich at the time. Ehrlich has just shared that the company is voluntarily restructuring.

Three Arrow Capital draws everyone in

Voyager shared the bed with Three Arrow Capital (3AC). The latter company had a $ 650 million loan from Voyager but cannot repay it. 3AC has also filed for bankruptcy.

The press release on this ‘restructuring’ states that 3AC played a major role in Voyager’s downfall. Honestly:

“This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers. Voyager’s platform is built to enable investors to access cryptocurrencies trading with simplicity, speed, liquidity and transparency. Although I strongly believe in this future, the long-standing volatility and spillover of the crypto markets over the past few months and the Three Arrows Capitals (“3AC”) default on a loan from the company’s subsidiary, Voyager Digital, LLC, require that we now consciously take and decisive action. The Chapter 11 process provides an effective and equitable mechanism for maximizing recovery. “

According to Frances Coppola, almost half of Voyager’s assets consisted of outstanding loans. About 60% of these loans (after bankruptcy, ‘come’ is perhaps a better word) at 3AC’s expense.

Broker and loan company

Voyager’s revenue model is comparable to BlockFi. It is a broker so you can buy and sell crypto there, but you can also store crypto there to earn interest. They then lend this crypto to, for example, 3AC. To borrow crypto, you need to provide security to give the company some security. In the case of 3AC, that security was not enough, and Voyager is now on the verge of toppling over.

Cryptocompanies, and especially lenders, have been dealing with solvency problems in recent weeks, preventing users from withdrawing their money. Celsius started this trend last month and announced in mid-June that it would cease firing. CoinLoan, CoinFLEX and Voyager themselves have all lifted restrictions or even withdrawals completely in recent days.

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