Another crypto company has filed for bankruptcy

Voyager Digital Holdings filed for bankruptcy yesterday. Oshe officially asked for him under Chapter 11, a provision of US bankruptcy law that allows companies to restructure debt after major financial failure. 

The company explained that the long-term volatility and contagion in crypto markets and the failure of crypto hedge fund Three Arrows Capital (3AC) required it to take decisive action now.

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Bear market strikes again, Voyager platform declares bankruptcy

Voyager's story is connected to the story of another bankruptcy, namely 3AC. 

In fact, Voyager Digital Holdings itself reported Three Arrows Capital (3AC) in late June, causing a Virgin Islands court to order liquidation. The company demanded the fund pay $25 million on the $350 million loan and filed for default proceedings after it failed to pay.

After the collapse of the Terra ecosystem, which resulted in the collapse of crypto markets, many companies with exposure to cryptocurrencies failed to cope, with some already going bankrupt. Paradoxically, the first to show trouble, Celsius Network, seems to be managing to pay off all its debts, at least for now.

Voyager already stopped all exchanges, deposits and withdrawals at the beginning of July, after which it evidently realized that it would not be able to pay all its debts. In addition to Voyager Digital Holdings, subsidiaries Voyager Digital LLC and Voyager Digital, Ltd. are also involved in the bankruptcy.

The company fails to face the high volatility of the crypto market

Voyager CEO Stephen Ehrlich said:

“While I strongly believe in this future, the long period of volatility and contagion in crypto markets over the past few months and the failure of Three Arrows Capital require us to take thoughtful and decisive action now. The Chapter 11 process provides an efficient and fair mechanism for maximizing recovery”.

Now clients with USD deposits in their accounts will have to wait at least for the reconciliation process to complete.

A case filed under Chapter 11 is often referred to as a "reorganization" bankruptcy. This type of bankruptcy stops all civil litigation and allows companies to prepare restructuring plans while remaining operational.

Clients will be harmed by this process (they won't get back exactly what the company owes them), the company intends to pay off the liabilities with a mix of cryptocurrencies they have saved, shares in the restructured company, Voyager tokens and money they get from the bankrupt 3AC.

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