The cryptocurrency sector’s troubles have deepened as broker Voyager Digital Ltd. filed for Chapter 11 bankruptcy protection.
As per Bloomberg, the firm and two affiliates, Voyager Digital LLC and Voyager Digital Holdings, took the step in the Southern District of New York, a filing showed. “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,” chief executive officer Stephen Ehrlich said on Twitter.
This well-established legal process whereby companies reorganize their financial obligations to emerge as stronger organizations, provides an efficient & equitable mechanism to maximize recovery. Our goal is to come out a stronger organization.
— Stephen Ehrlich (@Ehrls15) July 6, 2022
Last week, Voyager Digital temporarily suspended trading, deposits and withdrawal amid challenging market conditions. About $2 trillion in market value has been wiped from the crypto sector since a peak last year, amid a global wave of monetary tightening that drained liquidity and blew up leveraged bets.
Read more: Crypto broker Voyager look for bankruptcy as Mogul’s lifeline fails
Trading, deposits, withdrawals and loyalty rewards on the Voyager platform remain temporarily suspended, Ehrlich added. Sam Bankman-Fried, co-founder of crypto exchange FTX US, had acted as a sort of lender of last resort for Voyager by providing credit lines via Alameda Research. Voyager’s filing lists $75 million of unsecured loans from Alameda, making the firm the biggest single creditor.
New-York based Voyager is the latest in the digital-asset sector to hit trouble. Hedge fund Three Arrows Capital, to which Voyager had lent hundreds of millions of dollars, was ordered into liquidation last month after failing to repay creditors.
