Voyager Digital said on Wednesday that it has filed for bankruptcy, according to Reuters, a week after it had shut down deposits, trading, and withdrawals from its platform in order to investigate strategic options.
The Toronto-listed Voyager claimed that it had more than 100,000 creditors and between $1 billion and $10 billion in cryptocurrency assets when it filed for Chapter 11 bankruptcy on Tuesday. The same range was also noted by the corporation for its obligations.
All civil legal cases are placed on hold under Chapter 11 bankruptcy processes, which also allow businesses to continue operating while turnaround plans are being developed.
The continuous volatility and contagion in the cryptocurrency markets over the past several months, together with Three Arrows Capital’s default on a loan from the company’s subsidiary, Voyager Digital, LLC, have forced us to move immediately, according to Voyager Chief Executive Officer Stephen Ehrlich.
The cryptocurrency lender said it is looking at strategic alternatives to protect the value of its platform after suspending withdrawals, trading, and deposits to its platform. The action was taken after the business sent the troubled hedge fund Three Arrows Capital (3AC) a default notice for the fund’s inability to make mandatory loan payments.
Three Arrows Capital (3AC), a cryptocurrency hedge fund, filed for Chapter 15 bankruptcy last week in order to preserve its US assets while a liquidation was conducted in the British Virgin Islands.
According to blockchain analytics company Nansen, the fund, which was established by former Credit Suisse traders Zhu Su and Kyle Davies, handled $10 billion in assets as recently as March.
The stunning collapse of the so-called stablecoin TerraUSD in May, which saw the stablecoin lose virtually all of its value along with its linked token, may be blamed for many of the subsequent issues in the cryptocurrency market.
Due to rising interest rates affecting the sector and its prospects, cryptocurrency prices began to decline around the end of last year on predictions of a less lenient Fed. The largest and most well-known cryptocurrency, Bitcoin, has seen its worst first half-year performance ever, falling 58 percent in the first half of 2022.
