Crypto Broker Voyager files for Chapter 11 bankruptcy

All is not well with the crypto lender, Voyager Digital Ltd as it files for Chapter 11 bankruptcy. It has only been a few weeks since the firm attained a probable lifeline from Alameda Research owned by Sam Bankman-Fried. However, the increasing volatility of the crypto market in addition to the collapse of a hedge fund to which it had lent money pushed the firm in this direction. Whether this is indicative of the grave position of the crypto market is another question looming large in the background. Read along to know more.


What and Why

It is no secret that the crypto market is hanging by a very small thread that might break at any time. And Voyager’s bankruptcy filing adds further clarity to the situation. With the filing, Voyager enters the list of the growing number of firms that ended up on the receiving end of the market collapse. The market has already been witness to the distressing fall in the value of cryptocurrencies up to $2 trillion.

It was only a few weeks before that Voyage received a $48 million worth of credit line from Alameda Research. And now Alameda is listed as the firm’s biggest single creditor in the filing. The unsecured loan amount touches a whopping $75 million. Although the company still pegs hope on the future of the market, the current situation calls for emergency action. The CEO of Voyager Digital Ltd.’s tweet states “prolonged volatility of the crypto market,” and “the default of Three Arrows Capital” as the main reason for the bankruptcy filing. Take a look at the tweet.

What is Chapter 11?

A Chapter 11 Bankruptcy filing doesn’t mean the end of everything. In fact, it could be the firm’s one chance at a new beginning. Firms file for Chapter 11 Bankruptcy when they intend to stay in business amidst financial troubles. It offers protection from the actions of the creditors while they reestablish their assets. This is quite in contrast to the Chapter 7 bankruptcy filing which culminates in the complete liquidation of the company. Looks like all hope is not lost for Voyager.

According to the filing, the firm’s assets and liabilities range between $1 billion and $10 billion respectively. On its platform, the company has crypto assets worth $1.3 billion. In addition to this, it has another $350 million at the Metropolitan Commercial Bank under the For Benefit of Customers account. This is excluding the “owned crypto-assets” and the $110 million in cash.

Ever since the news broke of the firm’s bankruptcy filing, Twitter has been piling up with reactions and responses. Let us take a look.

A pretty wise move

Well, luck comes in surprising disguises.

Now that is the truth that lingering behind in silent mode

It might sound like the doomsday clock is ticking. But chances are it is just a false alarm, hopefully.

Hard lessons indeed. “Memory” is just overstating things.