Voyager Digital has filed for bankruptcy, the crypto lender said in a statement on Wednesday, a week after suspending withdrawals, trading and deposits to its platform as it sought additional time to explore strategic alternatives.
In its Chapter 11 bankruptcy filing on Tuesday, Toronto-listed Voyager estimated that it had more than 100,000 creditors and somewhere between $1 billion (roughly Rs. 7,930 crore) and $10 billion (roughly Rs. 79,305 crore) in crypto assets. The company also recorded the same range for its liabilities.
Chapter 11 bankruptcy procedures put a hold on all civil litigation matters and allow companies to prepare turnaround plans while remaining operational.
"The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company's subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now," Voyager Chief Executive Officer Stephen Ehrlich said.
Many of the crypto industry's recent problems can be traced back to the spectacular collapse of so-called stablecoin TerraUSD in May, which saw the stablecoin lose almost all its value, along with its paired token.
Back in May, the crypto market was rocked by the collapse of the stablecoin TerraUSD, an outlier because its peg to the dollar was supposed to be maintained by a complex algorithmically driven mechanism rather than by reserves of dollars or other assets, as is typical for stablecoins.
Stablecoins are pegged to the value of mainstream assets such as the dollar to boost confidence, and are the main medium for moving funds between cryptocurrencies or into regular cash.
TerraUSD's woes had contributed to a slide in crypto markets that saw over $357 billion (roughly Rs. 2,771 crore) or 21.7 percent of digital asset market capitalisation wiped out week-on-week, according to research from crypto exchange Kraken.
© Thomson Reuters 2022
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