Embattled crypto brokerage Voyager Digital is filing for chapter 11 bankruptcy after a prominent borrower defaulted on a sizable loan.
In a new press release, Voyager says the firm has commenced a restructuring process after crypto hedge fund Three Arrows Capital (3AC) failed to pay back a loan worth about $650 million.
Voyager Digital CEO Stephen Ehrlich says the firm is filing for bankruptcy due to “prolonged volatility and contagion” in the digital assets markets.
“This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers. Voyager’s platform was built to empower investors by providing access to crypto asset trading with simplicity, speed, liquidity, and transparency.
While I strongly believe in this future, the prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital (3AC) on a loan from the company’s subsidiary, Voyager Digital, requires us to take deliberate and decisive action now. The chapter 11 process provides an efficient and equitable mechanism to maximize recovery.”
The proposed plan would resume account access and return value to customers, but is subject to court approval, according to the press release.
“Customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common shares in the newly reorganized company, and Voyager tokens.”
Voyager’s announcement comes after top trading firm Alameda Research, founded by FTX CEO Sam-Bankman Fried, led a $60 million fundraising round for the crypto lender in May.
Earlier this month, Voyager halted all trading and withdrawals on its platform, citing 3AC’s loan default. In response, Alameda gave Voyager a massive credit line consisting of nearly $200 million in cash and 15,000 Bitcoin (BTC).
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Featured Image: Shutterstock/Yevheniia Rodina
