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Crypto firm Voyager Digital files for Chapter 11 bankruptcy protection

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Voyager said it has roughly $1.3 billion of crypto on its platform and holds over $350 million in cash on behalf of customers at New York’s Metropolitan Commercial Bank.

Justin Sullivan | Getty Images

Beleaguered crypto brokerage Voyager Digital has filed for Chapter 11 bankruptcy protection, becoming the latest casualty of chaos in digital asset markets.

Voyager commenced bankruptcy proceedings in the U.S. Bankruptcy Court of the Southern District of New York on Tuesday, according to a filing from the company. The filing lists assets of between $1 billion and $10 billion, and liabilities in the same range.

In a statement, the company said it has roughly $1.3 billion of crypto on its platform and holds over $350 million in cash on behalf of customers at New York’s Metropolitan Commercial Bank.

Voyager suffered huge losses from its exposure to crypto hedge fund Three Arrows Capital, which went bust last week after defaulting on loans from a number of firms in the industry — including $650 million from Voyager.

“We strongly believe in the future of the industry but the prolonged volatility in the crypto markets, and the default of Three Arrows Capital, require us to take this decisive action,” Voyager CEO Stephen Ehrlich said in a tweet early Wednesday.

The Toronto-listed firm’s shares have lost nearly 98% of their value since the start of 2022.

Voyager says it is still pursuing the recovery of funds from Three Arrows Capital, or 3AC as it’s otherwise known, including through court-supervised proceedings in the British Virgin Islands and New York.

Last week, Voyager paused all withdrawals, deposits and trading on its platform due to “current market conditions.” Ehrlich at the time said Voyager was seeking additional time to explore “strategic alternatives with various interested parties.”

Several other firms, including Celsius, Babel Finance and Vauld, have taken similar steps. On Tuesday, Vauld received a takeover offer from Nexo, a rival firm, after suspending its services.

The crypto market is grappling with a severe liquidity crisis as platforms struggle to meet a flood of withdrawals from customers amid a sharp fall in digital currency prices.

The declines in crypto started with a broad fall in risky assets as the Federal Reserve embarked on monetary tightening, and gathered pace following the collapse of Terra, a so-called stablecoin venture that was worth around $60 billion at its height.

Bitcoin, the world’s largest token, had its worst month on record in June, plunging 38%. Investors are bracing for a much longer downturn in digital currencies known as “crypto winter.”

Restructuring plan

Voyager said the move would allow it implement a restructuring process so that customers can be reimbursed.



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