Crypto lender Voyager Digital files for bankruptcy

Stephen Ehrlich, CEO and co-founder of Voyager Digital Ltd., speaks during the Piper Sandler Global Exchange and FinTech conference in New York, U.S., June 8, 2022. REUTERS/Brendan McDermid

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July 6 (Reuters) – U.S. crypto lender Voyager Digital (VOYG.TO) said on Wednesday it had filed for bankruptcy, becoming another victim of a dramatic price plunge that has rocked the cryptocurrency sector.

Crypto lenders such as Voyager have boomed during the COVID-19 pandemic, luring depositors with high interest rates and easy access to loans rarely offered by traditional banks. However, the recent fall in crypto markets – triggered by the fall of two major tokens in May – has hurt lenders.

New Jersey-based Celsius in June froze withdrawals and hired advisers for a potential bankruptcy filing. Voyager froze withdrawals this month, as did another lender, Singapore’s Vauld. Read more

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Last week, Voyager said it issued a notice of default to Singapore-based crypto hedge fund Three Arrows Capital (3AC) for failing to make payments on a crypto loan totaling more than $650 million. Read more

Later that week, 3AC filed for Chapter 15 bankruptcy, which allows foreign debtors to protect US assets, becoming one of the most high-profile investors affected by the crypto price crash. 3AC is being liquidated, Reuters reported last week. Read more

“Prolonged volatility and contagion in the crypto markets over the past few months, and Three Arrows Capital’s default on a loan from the company’s subsidiary, Voyager Digital, LLC, compels us to take deliberate and decisive action. now,” said Voyager’s chief executive. said Officer Stephen Ehrlich in a statement.

CHAPTER 11

In its Chapter 11 bankruptcy filing on Tuesday, New Jersey-based but Toronto-listed Voyager estimated it had more than 100,000 creditors and between $1 billion and $10 billion in assets and liabilities. an identical value.

Voyager last month signed an agreement with trading company Alameda Ventures, founded by Sam Bankman-Fried, CEO of major exchange FTX, for a revolving line of credit. A filing in the U.S. Bankruptcy Court Southern District of New York showed Alameda to be Voyager’s largest creditor, with unsecured loans of $75 million.

Alameda did not immediately respond to a request for comment.

Chapter 11 bankruptcy proceedings put a stop to all civil cases and allow companies to prepare reorganization plans while remaining operational.

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

Voyager said Wednesday that it has more than $110 million in cash and owns crypto assets. It intends to pay employees in the usual manner and to maintain their core benefits and certain customer programs uninterrupted.

Voyager 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 Bengaluru and Sinead Cruise and Tom Wilson in London; Additional reporting by Ann Maria Shibu; Editing by Rashmi Aich, Bradley Perrett, Alexandra Hudson

Our standards: The Thomson Reuters Trust Principles.

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