Digital Files for Crypto Lender Voyager Bankruptcy

Stephen Ehrlich, CEO and co-founder of Voyager Digital Ltd., speaks during the Piper Chandler Global Exchange and FinTech Conference on June 8, 2022 in New York City. REUTERS/Brendan McDermid

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July 6 (Reuters) – US crypto lender Voyager Digital (VOYG.TO) On Wednesday it said it had filed for bankruptcy, another casualty of the dramatic drop in prices that has rocked the cryptocurrency industry.

Crypto lenders like Voyager thrived in the wake of the Covid-19 pandemic, luring depositors with high interest rates and easy access to loans that traditional banks rarely offer. However the recent collapse of crypto markets – triggered by the collapse of two major tokens in May – has hurt lenders.

New Jersey-based Celsius halted the recall in June and has hired advisers on a possible bankruptcy filing. Voyager froze withdrawals this month, as did another lender, Singapore’s Vault. read more

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Last week, Voyager said it issued a default notice to Singapore-based crypto hedge fund Three Arrows Capital (3AC) for defaulting on more than $650 million in crypto debt. read more

3AC filed for Chapter 15 bankruptcy later that week, which allows foreign creditors to protect U.S. assets, making it one of the most affected investors by the fall in crypto prices. 3AC is now being dissolved, Reuters reported last week. read more

“The sustained volatility and contagion in the crypto markets over the past few months, and Three Arrows Capital’s default on the debt of Voyager Digital, LLC, the company’s subsidiary, necessitated deliberate and decisive action now,” Voyager’s chief executive said. Officer Stephen Ehrlich said in a statement.

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Chapter 11

In its Chapter 11 bankruptcy filing on Tuesday, Voyager — based in New Jersey but listed in Toronto — estimated it has more than 100,000 creditors and somewhere between $1 billion and $10 billion in assets and loans worth about the same amount.

Voyager last month signed a deal with trading firm Alameda Ventures, founded by Sam Bankman-Fried, CEO of major exchange FTX. A filing with the U.S. Bankruptcy Court for the Southern District of New York showed Alameda was Voyager’s largest single creditor, with $75 million in unsecured debts.

Alameda did not immediately respond to a request for comment.

Chapter 11 bankruptcy proceedings put a hold on all civil litigation matters and allow companies to prepare turnaround plans while the process is underway.

In a message to customers on Twitter, Ehrlich said the process would protect assets and “increase value for all stakeholders, especially customers.”

Voyager said Wednesday it has more than $110 million in cash and owned crypto assets. It wants to pay employees regularly and continue their premium benefits and certain customer programs without interruption.

Voyager has engaged Moelis & Company and The Consello Group as financial advisors, Kirkland & Ellis LLP as legal advisor and Berkeley Research Group LLC as restructuring advisor.

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Reporting by Shivam Patel in Bangalore and Sinead Cruise and Tom Wilson in London; Additional reporting by Ann Maria Shibu; Editing: Rashmi Eich, Bradley Perrett, Alexandra Hudson

Our Standards: Thomson Reuters Trust Principles.

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