Days after halting trading, withdrawals and deposits, crypto exchange Voyager Digital files for Chapter 11 bankruptcy in the Southern District Court of New York.
Voyager’s Chapter 11 bankruptcy filing showed the company had between $1 billion and $10 billion in assets from more than 100,000 creditors.
The struggling crypto exchange wasted no time after the United States bank holiday to file for bankruptcy on Tuesday. In a statement Wednesday, Voyager said the move was part of a “restructuring plan.” Once implemented, the plan would allow customers to regain access to their accounts, and Voyager would “give value back to customers.”
Voyager CEO Stephen Ehrlich explained in a Wednesday tweet that under his suggested Plan, customers with crypto in their accounts will receive a combination of crypto, proceeds from the recovery of Three Arrows Capital (3AC), common stock of the reorganized company, and Voyager tokens.
In return, customers with crypto in their account(s) will receive a combination of crypto in their account(s), proceeds from 3AC recovery, common stock of the reorganized company, and Voyager tokens.
— Stephen Ehrlich (@Ehrls15) July 6, 2022
He also added confirmation that customers with US dollars in their accounts will be able to access those funds after a “reconciliation and fraud prevention process has been completed with the Metropolitan Commercial Bank.”
In the same Twitter thread, Ehrlich said that he felt Chapter 11 was the best path forward for his customers, considering all factors, assuring that the move would protect assets on the platform and that Voyager would continue its operations.
Voyager said part of the restructuring process will result in the company filing “first day” applications that allow it to continue operations.
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Voyager said it intends to pay its employees in the usual manner and continue their “key services and certain customer programs without interruption.” However, trading, deposits, withdrawals and loyalty rewards remain suspended.
Signs that Voyager and its customers were facing headwinds came after the lending platform secured a $500 million loan deal with trading firm Alameda Research to cover losses from its exposure to crypto venture capital firm 3AC.
A day later, the platform lowered its daily withdrawal limit to $10,000 and then announced on July 1 that it would suspend trading, deposits, withdrawals and loyalty rewards distribution.
The Company’s subsidiary, Voyager Digital LLC, also previously issued 3AC a formal notice of default for non-payment of required payments on its 15,250 Bitcoin (BTC) and $350 million USD Coin (USDC) loan.
However, Three Arrows Capital is undergoing Chapter 15 bankruptcy proceedings and has reportedly been forced into liquidation by the British Virgin Islands, suggesting that Voyager may have a hard time recovering the funds it lent out.