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Voyager Digital, A Cryptocurrency Lender, Declares Bankruptcy

Voyager Digital, A Cryptocurrency Lender, Declares Bankruptcy
Voyager Digital declared bankruptcy on Wednesday, a week after the crypto lender froze withdrawals, trading, and deposits on its platform to investigate strategic alternatives.
Voyager, based in New Jersey, stated in its Chapter 11 bankruptcy filing on Tuesday that it had more than 100,000 creditors, assets worth between $1 billion and $10 billion, and liabilities for the same amount.
Chapter 11 bankruptcy proceedings halt all civil action and allow businesses to establish turnaround strategies while continuing to operate.
"The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company's subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now," Voyager Chief Executive Officer Stephen Ehrlich said in a statement.
Ehrlich stated in a separate message to consumers on the company's Twitter feed that the process would protect assets and "maximise value for all stakeholders, particularly customers."
According to a petition with the United States Bankruptcy Court for the Southern District of New York, Alameda Research was Voyager's largest single creditor, with unsecured debts totalling $75 million.
In October, Voyager disclosed Alameda's investment, calling it a "strategic collaboration" with "a clear pioneer" in the crypto business.
At the same time, Alameda Co-CEO Caroline Ellison stated that the collaboration provided "endless mutually beneficial potential to build both our businesses."
Voyager announced last week that it had served a default notice on Singapore-based crypto hedge fund Three Arrows Capital for failing to make due payments on a loan of 15,250 bitcoin (roughly $324 million) and $350 million in USDC, a stablecoin.
Later that week, 3AC filed for chapter 15 bankruptcy, which permits foreign debtors to protect their assets in the United States.
According to Reuters, who cited a source familiar with the case, Three Arrows is one of the highest-profile investors struck by the steep sell-off in crypto markets and is being liquidated. 
Voyager announced on Wednesday that it had more than $110 million in cash and crypto assets on hand.
It wants to pay staff as usual and to maintain its primary benefits and certain client programs as usual.
Many of the crypto industry's current issues can be linked back to the stunning collapse of the so-called stablecoin TerraUSD in May, which lost nearly all of its value along with its associated token. 
Voyager has retained financial advisers Moelis & Company and The Consello Group, legal counsel Kirkland & Ellis LLP, and restructuring advisory Berkeley Research Group LLC.

Christopher J. Mitchell

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