It's bon voyage for Voyager as there is no sign of recovery
Early this week, Voyager suspended all trading, deposits, withdrawals and loyalty rewards on its platform; Voyager has $1.3-bn crypto assets on the platform and over $350 mn of cash for customers; It has over $110 mn of cash and owned crypto assets on hand, which will provide liquidity to support day-to-day operations
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Mumbai: The Crypto crash is getting worse by the day and there is no sign of recovery, feel the experts. Top cryptocurrency broker Voyager Digital on Wednesday filed for bankruptcy in the US, after top crypto hedge fund Three Arrows Capital (3AC) did the same last week, in which Voyager has made significant investments which the company is yet to get back.
It had significant investments in Singapore-based hedge fund 3AC, which failed to make payments on a loan of 15,250 Bitcoins and $350 million USDCs-that makes the loan worth more than $650 million.
"This comprehensive reorganisation is the best way to protect assets on the platform and maximize value for all stakeholders, including customers," Stephen Ehrlich, CEO of Voyager, was quoted as saying.
Earlier this week, Voyager suspended all trading, deposits, withdrawals and loyalty rewards on its platform. Voyager has approximately $1.3 bn of crypto assets on the platform and more than $350 million of cash for customers.
The company said it has over $110 million of cash and owned crypto assets on hand, which will provide liquidity to support day-to-day operations. Voyager said it was actively pursuing all available remedies for recovery from 3AC. The development came as popular crypto tokens such as Bitcoin and Ethereum nosedived by nearly 70 per cent from their record highs amid the economic meltdown.
Talking to Bizz Buzz, Amanjot Malhotra, Country Head, Bitay, said: "The Crypto crash is getting worse by the day and there is no sign of recovery the industry is bracing for another dip where Bitcoin is expected to touch $13,000. Regarding the devaluations of crypto companies like BlockFi and Celcius what we need to understand is that no protocol works independently and each protocol works with other protocols."
As told by the CEO of Voyager Digital LLC, it is directly connected to the default of Three Arrows Capital on a loan from Voyager Digital's subsidiary coupled with the prolonged volatility and contagion in the crypto markets over the past few months.
Many of the crypto industry's recent problems can be traced back to the spectacular collapse of the so-called stablecoin TerraUSD in May, which saw the stablecoin lose almost all its value, along with its paired token, he said.
In recent weeks, several cryptocurrency businesses and lenders, in particular, have encountered solvency concerns. These have prevented clients from withdrawing their money. With its announcement to halt withdrawals in mid-June, Celsius started this trend last month. Voyager joins the bandwagon now.
Raj Kapoor, chief advisor, eCryptoverse, said: "Voyager Digital becomes the latest crypto lender to file for bankruptcy as after they suspended transactions, withdrawals, and loyalty rewards on its platform, citing the current adverse market conditions. According to its petition, they seek to create a financial plan that could solve its problems with debt and creditors and enable it to restructure its operations."
The company says that this will provide them with the necessary "efficient and equitable mechanism" to cope with the challenges. They also informed that clients with cryptocurrencies in their accounts will receive in exchange a combination of crypto, common shares in the newly "reorganized company, 'Voyager tokens, and proceeds for the Three Arrows Capital recovery."
This is a harbinger of things to come for crypto businesses which never imagined or planned for exigencies and Voyager is no different. More shall follow. It's Bon Voyage for Voyager and the coming months will see a lot more fall by the wayside.
