Voyager Digital submits a Chapter 11 bankruptcy filing and offers a recovery strategy.
Voyager Digital has now been added to the increasing list of CeFi companies suffering from exposure to Three Arrows Capital and falling cryptocurrency asset prices.
Voyager Digital, a cryptocurrency exchange, has suspended trading, withdrawals, and deposits for a few days. Voyager Digital has now filed for Chapter 11 bankruptcy in the Southern District Court of New York.
According to Voyager’s Chapter 11 bankruptcy petition, it is liable for between $1 billion and $10 billion worth of assets to more than 100,000 creditors.
After the American vacation, the beleaguered cryptocurrency exchange wasted little time in filing for bankruptcy on July 5. Voyager said that the change is a part of a “Plan of Reorganization” in a statement on Wednesday. When the plan is put into action, customers will be able to access their accounts once more, and Voyager will “restore value to customers.”
In a tweet on July 6, Voyager CEO Stephen Ehrlich said that under its proposed solution, consumers having cryptocurrency in their accounts will receive a mix of cryptocurrency, money recovered from Three Arrows Capital (3AC), common shares in the newly reorganized business, and Voyager tokens.
Additionally, he gave assurance that clients having US dollars in their accounts will be able to access their assets following the completion of a “reconciliation and fraud prevention process with Metropolitan Commercial Bank.”
Ehrlich claimed that the decision would protect platform assets and that Voyager will continue to operate in the same Twitter thread where he stated that, after taking all relevant aspects into account, he believed Chapter 11 was the best course of action for his clients.
In order to continue operating, the company will file “First Day” motions as part of the restructuring procedure, according to Voyager.
Trading, deposits, withdrawals, and loyalty incentives will all remain frozen, although Voyager stated that it still plans to pay its staff as usual and continue their “principal benefits and select client programs without disruption.”
After the lending platform got into a $500 million loan deal with trading firm Alameda Research to offset losses from its exposure to cryptocurrency venture capital firm 3AC, there were indications that Voyager and its clients were facing difficulties.
The site subsequently stated on July 1 that it would be stopping trading, deposits, withdrawals, and the delivery of loyalty awards. A day later, it cut its daily withdrawal cap to $10,000.
Additionally, 3AC earlier received a notice of default from the company’s subsidiary Voyager Digital LLC for failing to make the due payments on its loan of 15,250 Bitcoin (BTC) and $350 million USD Coin (USDC).
Voyager may find it challenging to recoup the money it paid out because Three Arrows Capital is apparently facing Chapter 15 bankruptcy proceedings and has been ordered to be liquidated by the British Virgin Islands.