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Crypto lending platform Voyager files for bankruptcy protection

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Another victim of the cryptocurrency crisis is Voyager Digital, which has filed for bankruptcy protection in the United States. Chapter 11 bankruptcy was filed late Tuesday in federal court in New York after the Toronto-listed broker and lender suffered losses of more than $650 million on a loan to the collapsed crypto investor Three Arrows Capital.

Just over a week after it had ceased trade and barred consumers from retrieving their money, Voyager went belly up. Known for its aggressive bets on rising crypto values, Three Arrows, based in Singapore, borrowed extensively from major industry players to increase their market wagers, leaving it seriously underwater as digital token prices collapsed. About 70 percent of top cryptocurrencies have lost value since their high in late 2017.

Despite a rescue loan from Alameda Research, the trading firm managed by FTX founder Sam Bankman-Fried, the company went insolvent last month. According to the bankruptcy filings, Voyager had pulled down the maximum $75 million permitted in a 30-day period, making Alameda its largest unsecured creditor.

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Bear market continues to take its toll on crypto lending platforms

Voyager's Chapter 11 petition is an attempt to shield the company from lawsuits while it restructures. According to the statement, the corporation has more than 100,000 creditors and between $1bn and $10bn in liabilities.

According to the documents, it owes over $1 million to Google, with its other top unsecured creditors being consumers. On top of that, Voyager said it had $110 million in cash and "owned crypto assets" on hand, as well as $1.3 billion worth of crypto assets on its platform.

A combination of crypto assets, the proceeds from Three Arrows' bankruptcy, shares in the company when it re-emerges from insolvency, and "Voyager tokens" will be used to reimburse clients, subject to court clearance.

A number of cryptocurrency-related businesses, including Voyager, have been affected by the downturn in the crypto markets. Voyager has announced that it will be suspending customer withdrawals and that its funds are held in an omnibus account at Metropolitan Commercial Bank.

Although customers' funds are insured by the FDIC, Voyager has cited the prolonged volatility in the markets as the reason for its decision.

Other crypto lending platforms, such as Celsius and BlockFi, have also been affected by the market downturn and have suspended customer withdrawals. FTXhas provided rescue financing to BlockFi, which gives BlockFi the opportunity to acquire Three Arrows. For more developments on the crypto news go to Latest Moni.

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Author: Hassan Alzaza

Author: Hassan Alzaza

My Name is Hassan Al-Zaza, I am a detail-driven and experienced SEO Content Writer living in Germany with over ten years of experience developing and producing top-notch content. I have a Bachelor's degree in English Language and Literature and a Master's in Business Communication. I have been working for 12 years in marketing, Content Writing, and ad Copywriting across SMEs, corporate, and public sector organizations in the EU and the Middle East region. I helped build brands for a wide range of successful companies from IT and software consultancies to the finance industry, tourism, and retail.

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