During the winter, Voyager Digital fell due to its outstanding liquidity issues. As a result, the firm filed for Chapter 11 bankruptcy in July to assist it with the situation after halting withdrawals on its platform.
The crypto winter for 2022 was a drastic one that tumbled almost all the cryptocurrencies. Coupled with the collapse of the algorithmic Terra and its ecosystem, the industry was thrown into crisis.
Many crypto-related companies struggled to keep their balance. However, not all of them could weather the storm and the effects of the harsh bearish trend on the crypto space.
Then came the drowning of some crypto firms, such as high-interest lending platforms. Some of the halted withdrawals while battling bankruptcy. The first firm to show signs of insolvency was Three Arrow Capital (3AC). Its inability to weather off the impact of the bearish trend created a contagion for others.
Voyager Digital was launched in 2019 as a crypto lending platform. Its operation cuts across accepting customers’ deposits and paying interest on the deposited amounts. Also, the firm uses the deposited funds for lending to other users. At the time of its bankruptcy filing, Voyager had total liabilities of about $4.8 billion.
Voyager Auctioned Its Distressed Assets
In a recent development, a report from Wall Street Journal revealed that Binance and FTX are battling to acquire Voyager’s assets. Unfortunately, the two big crypto exchanges have bided for help. Following its distressed situation, Voyager auctioned its holdings to the public on September 13 this year. This action has seen some participants indicating their interest in the assets.
According to the source, Binance has bided higher than FTX by an additional $50 million. FTX has been involved in a buying spree since the year as it looks out for possible good assets. However, its moves have resulted in the firm being distressed with the recurring bearish trend in the crypto market.
Crypto market trends sideways | Source: Crypto Total Market Cap on TradingView.com
The bidding for Voyager’s assets saw Binance and FTX taking the lead. But there are other participants like CrossTower, a trading platform, and Wave Financial, a crypto investment manager. The announcement for the winning bid is expected on September 29 though it could come sooner than expected.
Voyager Liquidity Issues Came From Tie With 3AC
Voyager digital was hit with the problem of insolvency leading to its filing for bankruptcy. This was majorly linked to its financial tie of over $650 million with Three Arrows Capital, a hedge fund platform.
At the time of bankruptcy, Voyager lent about $377 million to Alameda Research, a crypto trading firm. Alameda Research is also owed by the CEO of FTX, Sam Bankman-Fried. Alameda Research purchased a portion of Voyager during its filing, which is a 9.5% equity stake.
Featured image Pixabay, Chart: TradingView.com