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 casualty of the dramatic price drop that has rocked the cryptocurrency sector.
Crypto lenders like Voyager have thrived during the COVID-19 pandemic, attracting depositors with high interest rates and easy access to loans rarely offered by traditional banks. However, the recent decline 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 possible 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 default notice 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 sharp fall in crypto prices. 3AC is now in liquidation, Reuters reported last week. Read more
“The continued volatility and contagion of 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, require us to take deliberate and decisive action now,” Voyager CEO Stephen Cop Ehrlich said in a statement.
CHAPTER 11
In its Chapter 11 bankruptcy filing Tuesday, Voyager — based in New Jersey but registered in Toronto — estimated it had more than 100,000 creditors and somewhere between $1 billion and $10 billion in assets and liabilities of the same value.
Voyager had signed an agreement last month with the trading firm Alameda Ventures, founded by Sam Bankman-Fried, chief executive of the major exchange FTX, for a revolving credit facility. A filing in the U.S. Bankruptcy Court for the Southern District of New York showed that Alameda was Voyager’s largest single creditor, with $75 million in unsecured loans.
Alameda did not immediately respond to a request for comment.
Chapter 11 bankruptcy proceedings suspend all civil litigation and allow companies to prepare recovery 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 on Wednesday that it has more than $110 million in cash and owned crypto assets. It intends to pay employees as usual and continue their basic benefits and certain customer programs without interruption.
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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