Like its namesake, Voyager Digital wanted to go where few crypto trading companies have gone before, to truly make crypto “mainstream” with items like debit and credit cards that earn users crypto rewards. Instead of going “to the moon” and beyond, Voyager is taking a parabolic trajectory back down to where many trading platforms are currently heading: straight into the dirt.
The New Jersey-based company announced early Wednesday it had filed for Chapter 11 bankruptcy protection in New York, and intends to seek recognition of the case in Ontario Superior Court. Chapter 11 is a classification of bankruptcy that allows companies to “reorganise” or, more succinctly, get their s*** in order while avoiding the pesky demands of creditors.
Documents filed with the New York southern district bankruptcy court Tuesday show that the company had more than 100,000 creditors as well as between $US1 ($1.47) and $US10 ($14.75) billion in both assets and liabilities. Filings show Voyager’s biggest creditor was Alameda Research Ventures, a crypto trader that holds an over 9% equity stake in the company with a claim of $US75 ($110) million.
Things have not been going great for Voyager since the start of the ongoing “crypto winter.” The company had previously restricted withdrawals on its platform, limiting users to just $US10,000 in a 24-hour period before finally suspending all trading activity on its platform altogether July 1. One big issue is that company executives claim that Three Arrows Capital, a crypto-centric hedge fund owes them quite a lot of money. Three Arrows was ordered to liquidate its assets after piling up a mountain of demands they repay millions of dollars it owes to crypto funds. Voyager has said Three Arrows owes it a “beastly” number of bitcoin equaling $US666 ($982) million.
In a release, Voyager CEO Stephen Ehrlich said the move is due to “the prolonged volatility and contagion in the crypto markets over the past few months as well as the default happening over at Three Arrows on a loan from the Company’s subsidiary.” Ehrlich said that declaring bankruptcy “is the best way to protect assets on the platform,” and protect stakeholders and customers.
Ehrlich further said in their proposed reorganization plan, customers that still have crypto in their accounts (which is likely, seeing that the company had previously halted withdrawals) will see a return on their assets through a combination of crypto, proceeds from Three Arrows’ liquidation, and shares in the newly reorganized Voyager.
The company did not disclose a timeline for exactly when any of that is supposed to happen, and it’s all subject to change depending on what happens with Three Arrows liquidation. Just this week, Three Arrows filed for its own set of bankruptcy protections to protect its U.S.-based assets.
Voyager also said customers with ether-based USD coin in their accounts will regain access once they sort things out with its bank. Again, the company did not say when that might happen, and it currently leaves users unable to access the assets stored in their accounts.
The ongoing crypto bear market has caused a number of crypto trading companies to restrict withdrawals to keep their platforms from going under. Just this past week, CoinLoan and Vauld both restricted its users from snatching their own stake of the dragon’s hoard. Previously, trading platforms Coinflex, Celsius, and Binance had restricted withdrawals as well.