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Crypto firm Voyager Digital files for bankruptcy amid large loan loss and contagion in the digital asset market

Fernando Gutierrez-Juarez/picture alliance via Getty Images

  • Crypto lender Voyager Digital filed for Chapter 11 bankruptcy protection on Tuesday. 
  • Voyager said it has been hurt by “prolonged volatility and contagion” in the crypto markets.
  • The company also cited the failure of hedge fund Three Arrows to repay a loan as a reason it filed for protection. 

Voyager Digital filed for bankruptcy protection on Tuesday as the crypto platform navigates through a meltdown in prices in the digital-asset market and its exposure to a hedge fund that failed to repay a multimillion-dollar loan. 

“This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers,” CEO Stephen Ehrlich said in a press statement. 

In Chapter 11 filing with the bankruptcy court in the Southern District of New York, Voyager Digital listed Alameda Research Ltd. and Alameda Research Ventures among its creditors. Alameda, founded by crypto billionaire and FTX brokerage boss Sam Bankman-Fried, last month extended a loan to aid Voyager. 

Voyager’s filing followed its warning in June that cryptocurrency hedge fund Three Arrows Capital, or 3AC, hadn’t repaid a loan of 15,250 bitcoin and $350 million of the USDC stablecoin, amounting to more than $660 million. Three Arrows last week filed for Chapter 15 bankruptcy, crippled in part by its own exposure to the collapse of cryptocurrency luna. 

Meanwhile, the so-called “crypto winter” in the cryptocurrency market has pulled the market’s valuation to roughly $905 billion after hitting an all-time high above $3 trillion in November. Bitcoin on Wednesday traded around $20,000, sliding from its all-time high above $68,000 in November. 

The “prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now,” said Ehrlich. 

Voyager said it has more than $110 million of cash and owned crypto assets on hand that will provide liquidity to support day-to-day operations during the Chapter 11 process.

Crypto lenders Vauld and Celsius Network have also been hit by the crypto-market crisis, forcing each to recently suspend withdrawals. Celsius has paid down $183 million of its debt to decentralized exchange Maker, according to CoinDesk, citing blockchain data. 

Voyager Digital CEO Steve EhrlichVoyager Digital CEO Steve Ehrlich



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