Crypto Broker Voyager Digital Files for Chapter 11 Bankruptcy

Share Article
In Brief
  • Voyager Digital claims it has $1.3 billion in crypto on the platform.

  • A Chapter 11 allows the firm to remain operation while restructuring.

  • Restructuring and recompense plans have been proposed.

  • promo

    Top Crypto Exchanges Without KYC Read Now

The Trust Project is an international consortium of news organizations building standards of transparency.

The embattled crypto brokerage company Voyager Digital has filed for Chapter 11 bankruptcy following last week’s suspension of deposits and withdrawals.

The crypto collateral collapse contagion continues to wreak havoc across the industry, with big players falling like dominoes. The latest is Voyager Digital, which has filed for Chapter 11 bankruptcy in New York, according to a court filing on July 5.

According to the petition, Voyager has a vague estimate of assets and liabilities between $1 billion and $10 billion declared for each. Its estimated number of creditors is more than 100,000.

In an announcement, the firm stated that it has around $1.3 billion in crypto assets, and more than $350 million in cash held in the FBO (For Benefit Of) account for customers at Metropolitan Commercial Bank.

The firm is seeking protection for three divisions, Voyager Digital Holdings, Voyager Digital LLC, and Voyager Digital, Ltd.

On July 1, Voyager Digital suspended trading, deposits, withdrawals, and loyalty rewards, citing extreme market conditions.

Voyager restructuring plans

A Chapter 11 is one of the most complex forms of bankruptcy proceedings, as it allows a company to stay in business while restructuring its obligations. Any proposed reorganization plan must be in the best interest of the creditors and if one isn’t suggested, the creditors may propose a plan instead.

CEO Stephen Ehrlich, said: “This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers.” He added that the Chapter 11 process “provides an efficient and equitable mechanism to maximize recovery.”

As part of the reorganization process, Voyager will file customary “First Day” motions to allow it to maintain operations.

The proposed Plan of Reorganization would resume account access and return value to customers, but it would require court approval.

Recompense from 3AC recovery

The announcement added that customers holding crypto on the platform will receive a combination of their held assets and proceeds from the 3AC recovery, common shares in the newly reorganized company, and Voyager tokens.

It added that customers holding USD will receive access to their funds “after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank.”

3AC, one of the industry’s largest crypto-focused hedge funds, had borrowed 15,250 BTC and $350 million USDC from Voyager. The Singapore-based firm filed for Chapter 15 bankruptcy in New York on July 1.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
Share Article

Martin has been covering the latest developments on cyber security and infotech for two decades. He has previous trading experience and has been actively covering the blockchain and crypto industry since 2017.

Follow Author