Voyager cryptocurrency platform has filed for bankruptcy after its withdrawals freeze. Vauld, another industry company in turmoil, discusses a merger.
Nothing gets better when it comes to cryptocurrency. The Canadian platform tripwhich operated as a virtual currency broker, filed for Chapter 11 bankruptcy on Tuesday. That doesn’t mean the company has been spoon-fed, but it will use the law to work out its restructuring.
Voyager ran into trouble after the default of a $670 million loan from Three Arrows Capital.
Voyager’s announcement comes just days after the broker freezes the footage. He ran into trouble after the hedge fund defaulted on a $670 million loan Three arrows capital. The Economist magazine indicates that the broker’s problems date back to early June. By that date Voyager had received a $485 million support loan from Alameda, a trading platform of American billionaire Sam Bankman-Fried. This will not have been enough for the Canadian broker to avoid bankruptcy.
For Vauld, another cryptocurrency platform in financial trouble, the road to rescue will be through a merger.
No one currently knows what will happen to Voyager. On the other hand, for vaud, another cryptocurrency platform in financial difficulties, the road to rescue will be through a merger. After freezing the footage, the company announced Monday that it had hired lawyers to assess restructuring options. She said she was in talks with her colleague Nexo on Tuesday so that it would buy her back.
Nexo has given itself a 60-day window to review the deal, said Antoni Trenchev, Vauld co-founder. At the moment, however, the platform is not out of its financial troubles yet. Especially since Nexo pulled out of another acquisition, that of Celsius Network’s cryptocurrency lender, also in trouble. The latter declined his colleague’s offer, saying it was looking into strategic transactions while restructuring its debt.
The setbacks of Voyager, Vauld and Celsius Networkao all find their explanation in the fall in cryptocurrency prices, bitcoin in the lead. The virtual currency had seen a rapid surge in 2021 after dropping about $5,000 in March 2020 when lockdowns were announced to contain the Covid-19 pandemic.
It hit $66,000 in October 2021. Traders and hedge funds then went into debt to acquire virtual currencies, hoping it would break their record. But since the beginning of the year, the price of bitcoin has only fallen. It is down more than 70% from its last peak.
Faced with the fall of cryptocurrencies, virtual currency lending platforms have made it margin callsin other words, they asked their clients to bail out their account as soon as possible in order to maintain their leveraged position.
Cascading Financial Troubles
The worse the virtual currency decline has become, the higher the demand for capital from brokers has been. Parsec Finance, a blockchain data analytics firm, reports that for ether, the asking price per unit of cryptocurrency has risen from $700 in June to $900.
But funds like Three Arrow Capital have been unable to meet their margin calls. Their financial problems have gone back to their brokers, who have no liquidity restrictions imposed by regulators as the cryptocurrency world is unregulated.
However, they are not all in the same boat, such as Sam Bankman Fried, who could use his money to buy businesses cheaply. He has also signed an agreement for a merger between his trading platform FTX and BlockFi, another player in the troubled sector. So much so that some compare the billionaire to banker John Pierpont Morgan (originally the name of the bank JPMorgan Chase), who had saved other banks in the United States from bankruptcy in the early 20th century.