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Cryptocurrency prices have collapsed this year.
Dreamstime
Cryptocurrency broker and lender
Voyager Digital
has filed for bankruptcy protection, the latest digital asset company struggling in the midst of a collapse in cryptocurrencies and contagion from the failure of hedge fund Three Arrows Capital.
Voyager (ticker: VOYG.Canada) said on Wednesday that it had started voluntary Chapter 11 bankruptcy proceedings in the United States and sought recognition of its case in Ontario, Canada, where the company is listed.
Bankruptcy protection falls after some tumultuous days for Voyager, which last week announced the temporary suspension of withdrawals, deposits, trades and rewards on its platform while evaluating its future strategy. The company says it plans to resume account access when the restructuring is complete.
“Extensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers,” said Stephen Ehrlich, Voyager’s CEO, in a statement. “The prolonged volatility and contagion in the crypto markets in recent months, and the default of Three Arrows Capital on a loan … require us to take conscious and decisive action now.”
The group said it had around $ 1.3 billion in digital assets on its platform and had $ 350 million in cash at the bank, while another $ 650 million was due to it from Three Arrows – a once-high-flying hedge fund that has gone bankrupt in the middle of it. the latest market turmoil. Voyager issued a standard warning to the Singaporean fund last month, saying on Wednesday that it “actively pursues all available remedies for recovery.”
As a prominent institutional borrower, the failure of the Three Arrows has been felt throughout the crypto space. Voyager has said that the exposure to the fund exceeds 15,250 Bitcoin – more than $ 300 million at current prices – in addition to $ 350 million in a stack coin linked to the US dollar. This $ 650 million exposure is approximately 10 times more than Voyager’s market value of $ 65.7 million.
Voyager’s problems come despite a lifeline from Alameda Research – the trading company run by crypto-heavyweight Sam Bankman-Fried – in the form of a $ 510 million credit line to meet liquidity requirements. Shares in Voyager have collapsed in the midst of recent pressure, falling almost 90% in the last month alone.
Voyager joins cryptocurrencies including Celsius and Vauld to collapse amid a severe decline in digital asset prices in recent weeks and months, leading to a dramatic winding up of positions. The price of
Bitcoin
traded at less than a third of its all-time high near $ 69,000, hit in November 2021, while the market value of the entire crypto area has crumbled up to $ 900 billion from nearly $ 3 trillion in the same period.
“Last week saw the end of Q2, a quarter that was one of the most volatile in crypto’s recent history. The industry experienced its own version of a credit crunch as the infection spread across the ecosystem, Dessislava Aubert and other researchers at crypto data provider Kaiko wrote in a Tuesday note.
Write to Jack Denton at [email protected]
