Voyager Digital has filed for bankruptcy as the crypto crash deepens.
A week after halting withdrawals, deposits, and trading on its platform, the crypto lender filed for voluntary Chapter 11 bankruptcy in the US on Tuesday.
“This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers,” said CEO Stephen Ehrlich.
“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.”
The latest development comes as a worsening “crypto winter” has seen prices of major cryptocurrencies plunge and crypto firms struggling to survive.
Bitcoin, the biggest cryptocurrency, has fallen over 55 per cent for the year and near 70 per cent from its all-time high of near $69,000 (£57,846) in November to trade at $20,182 (£16913) today.
Voyager currently has $1.3bn (£1.09bn) of crypto assets on its platforms and claims of over $650m against crypto hedge fund Three Arrows Capital, which filed for bankruptcy last week. It had received a notice of default from Voyager for failing to make loan payments on 15,250 bitcoin (about $307m, £257.6m) and $350m (£293m) worth of stablecoin USDC.
Voyager had also received $500 million in financing last month from Alameda Research, FTX CEO Sam Bankman-Fried’s quantitative research firm last month.
“The chapter 11 process provides an efficient and equitable mechanism to maximize recovery,” Ehrlich said.