Voyager Files for Bankruptcy
Voyager Digital filed for bankruptcy late Tuesday, becoming the second high-profile crypto firm to do so in recent days.
The Toronto-based firm filed for Chapter 11 bankruptcy protection Tuesday in the Southern District of New York. It estimates it has more than 100,000 creditors and assets worth between $1 billion and $10 billion, citing about the same numbers for its debts.
Voyager Digital Holdings, Inc, Voyager Digital, LLC, and Voyager Digital Ltd filed for bankruptcy.
Crypto companies – and lenders in particular – have faced solvency issues in recent weeks, with several stopping customers from withdrawing their funds.
Celsius started this trend last month, announcing in mid-June that it would stop withdrawals. CoinLoan, CoinFLEX, and Voyager have all announced restrictions or complete suspension of withdrawals in recent days.
According to writer Frances Coppola, Voyager’s loan portfolio accounted for nearly half of its total assets, and nearly 60% of that portfolio was loaned to Three Arrows.
In a statement posted online after the article was published, Voyager CEO Stephen Ehrlich said the company’s reorganization “is the best way to protect” the company’s assets and pointed the finger at Three Arrows for some of its problems.
Following that statement, Ehrlich posted on Twitter that “customers with crypto in their account(s) will receive in exchange a combination of crypto in their account(s), proceeds from the 3AC recovery, common stock in the newly reorganized company, and Voyager tokens.”
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.
— Stephen Ehrlich (@Ehrls15) July 6, 2022
The filing comes at a time when industry observers are increasingly critical of Voyager’s business practices, particularly the way the Canada-registered firm claims in its marketing materials that investors’ deposits are protected by Federal Deposit Insurance Corporation (FDIC) insurance.
While FDIC insurance does protect bank cash deposits up to $250,000, it does not cover cash converted into stablecoins. Commentators, including Coppola, called Voyager’s marketing related to deposit processing misleading.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
