Voyager Files for Bankruptcy Citing Contagion in Crypto Markets, Three Arrows Capital’s Loan Default

Crypto lender Voyager Digital has filed for Chapter 11 bankruptcy. The company explained that “prolonged volatility and contagion in the crypto market” and the default on the loan of crypto hedge fund Three Arrows Capital (3AC) “now require us to take deliberate and decisive action.”

Voyager’s bankruptcy filing

Voyager Digital Ltd. (Voyager Digital) announced today that it has filed for Chapter 11 bankruptcy protection. Details of the announcement are as follows.

The company and its principal operating subsidiaries have filed a voluntary petition for reorganization under Chapter 11 with the U.S. Bankruptcy Court for the Southern District of New York.

In addition, the company announced that it “intends to seek approval of Voyager’s Chapter 11 case in the Ontario Superior Court of Justice.”

Cases filed under Chapter 11 of the U.S. Bankruptcy Code are often referred to as “reorganization” bankruptcies. This type of bankruptcy puts all civil litigation matters on hold and allows a company to prepare a plan of reorganization while continuing to operate.

In its filing, New Jersey-based Voyager estimated that it had over 100,000 creditors; Alameda Research was the crypto lender’s largest single creditor with an unsecured loan of $75 million. Additionally, Voyager said it had assets of between $1 billion and $10 billion and liabilities of equal value.

Voyager CEO Stephen Ehrlich explained that.

The prolonged volatility and contagion in the crypto markets over the past several months and the default of Three Arrows Capital (“3AC”) on a loan from its subsidiary, Voyager Digital, LLC, now require us to take careful and decisive action

Voyager has suffered huge losses from its exposure to Three Arrows Capital, a Singapore-based crypto hedge fund. Last week, the crypto lender announced that it had issued a notice of default to 3AC for failing to make required payments on a loan of 15,250 bitcoins (approximately $307 million based on a price ofBTC(at time of writing), and $350 million worth of stablecoin USDC The company stated that it had failed to make the payments. However, on July 1, 3AC filed for Chapter 15 bankruptcy, which allows foreign debtors to shield their U.S. assets.

Last week, Voyager suspended all transactions, deposits, and withdrawals on its platform, citing “current market conditions. “Several other crypto companies, including Celsius Network, Babel Finance, and Vauld, have suspended withdrawals as well. The latter received a takeover offer from rival firm Nexo on Tuesday.

As of this writing, Voyager’s stock is down 97.8% year-to-date.

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