Days after it suspended trading, deposits, and withdrawals on its platform, cryptocurrency lending platform Voyager Digital LLC filed for Chapter 11 bankruptcy protection in New York, according to its court filing.
What Happened: As per the petition filed by Voyager, the company has over $110 million in cash and owned cryptocurrency assets on hand, which will provide liquidity to support day-to-day operations during the Chapter 11 process, in addition to more than $350 million cash held in a customer benefit account at Metropolitan Commercial Bank.
Voyager has approximately $1.3 billion of cryptocurrency assets on its platform, besides claims against Three Arrows Capital (3AC) of more than $650 million.
"The prolonged volatility and contagion in the crypto markets over the past few months, and the default of 3AC on a loan from the Company's subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now,” Stephen Ehrlich, CEO of Voyager, said in a statement.
Why It Matters: Voyager had earlier announced that its subsidiary had issued a notice of default to 3AC for failure to make the required payments on its previously disclosed loan of 15,250 Bitcoin (CRYPTO: BTC) and $350 million in USD Coins (CRYPTO: USDC).
Three Arrows filed for Chapter 15 bankruptcy last Friday.
According to Voyager's reorganization proposal, customers with cryptocurrency in their account will receive a combination of those digital assets, proceeds from the 3AC recovery, common shares in the newly reorganized company, and Voyager tokens.
The plan also contemplates an opportunity for customers to select the proportion of common equity and crypto they will receive, subject to certain maximum thresholds.
Photo via T. Schneider on Shutterstock
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