Crypto brokerage firm Voyager Digital announced today it has filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court of the Southern District of New York. The announcement came just days after the firm suspended withdrawals to seek strategic alternatives focused on protecting assets.
Voyager Files for Chapter 11 Bankruptcy
Stephen Ehrlich, CEO of Voyager, said: “This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers.”
The firm has over 100,000 creditors, between $1 billion and $10 billion in assets, and liabilities worth the same amount, according to a court filing.
Voyager noted in a press release that it has more than $110 million of cash and owned crypto assets on hand that will enable it to continue operating during the Chapter 11 process.
The firm also has more than $350 million in cash in its For Benefit of Customers (FBO) account at Metropolitan Commercial Bank, its platform has crypto assets worth $1.3 billion, and several allegations made against the cryptocurrency hedge company Three Arrows Capital (3AC) worth $650 million. Last week, Voyager issued a default notice to 3AC.
Voyager said it had used every legal means at its disposal, including court-ordered liquidation in the British Virgin Islands and New York, to recoup its loan from 3AC.
If the reorganization plan gets approved by the bankruptcy court, Voyager noted that it will be able to make its customers whole.
Under the plan, customers would receive a combination of crypto in their accounts, proceeds from 3AC recovery, shares of the newly reorganized company, and Voyager tokens.
Furthermore, users with U.S. dollars in their accounts will recover their funds after a reconciliation and fraud prevention process with Metropolitan Commercial Bank is completed.
Meanwhile, shortly after Voyager announced that it had filed for bankruptcy, the company’s stock $VOYG was delisted from the Toronto stock exchange.
Trading and Withdrawal Still Suspended
The broker said trading and withdrawals on its platform remain suspended and that it will continue to explore all strategic alternatives to maximize value for its customers and stakeholders.
Meanwhile, following the recent market downturn, liquidity troubles have been spreading across the sector. A few weeks ago, crypto lending platforms Celsius Network and Babel Finance suspended withdrawal services on their platforms.
Singapore-based lending platform Vauld also recently suspended trading, deposits, and withdrawals on its platform.
