After 3AC Bankruptcy, Voyager Digital Also Files for Bankruptcy Protection
[Asia Economy Reporter Jeong Hyunjin] As concerns grow over the 'domino bankruptcy' reality in the cryptocurrency industry, with cryptocurrency lending platform Voyager Digital filing for bankruptcy protection, Sam Bankman-Fried, a 30-something cryptocurrency billionaire, hinted at the possibility of additional support, stating that "billions (of dollars) remain" to support the unstable digital asset market.
Sam Bankman-Fried, CEO of the global cryptocurrency exchange FTX, said in an interview with a major foreign media outlet on the 6th (local time), "Several companies have started reaching out to us." He noted that the worst liquidity crisis seems to have passed, and while some smaller cryptocurrency exchanges are still struggling, most of the companies that contacted them are not in very difficult situations.
CEO Bankman-Fried has played the role of a savior in the cryptocurrency industry by providing liquidity over the past few weeks to prevent the turmoil in the cryptocurrency market that began with the collapse of the Korean version of cryptocurrency Luna and TerraUST last month. The Economist in the UK even noted that some people see him as similar to JP Morgan in the early 20th century, who rescued investment banks in trouble.
Earlier, CEO Bankman-Fried supplied liquidity to cryptocurrency-related companies through Alameda Research, the operator of FTX. He lent approximately $200 million (about 261.2 billion KRW) in cash and other assets to Voyager Digital and provided $250 million in liquidity to the US cryptocurrency lending platform BlockFi.
CEO Bankman-Fried emphasized that the goal of this financial support is to protect customers' assets and prevent these problems from spreading throughout the system. He said, "It is more important than anything else that consumers have trust that this (financial product) will work as advertised, and if that trust is broken, it will be difficult to restore."
One day before Bankman-Fried's interview, on the 5th, Voyager Digital filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code in the Southern District of New York. According to the Wall Street Journal (WSJ) and others, Voyager stated in documents submitted to the court that it faced a bank run as customer withdrawal requests surged. Voyager confirmed that it holds approximately $1.3 billion worth of cryptocurrency assets on its platform, $110 million in cash and cryptocurrency assets to help support operations during the Chapter 11 process, and also explained that it holds $350 million in cash in a New York bank account on behalf of customers.
Voyager's bankruptcy protection filing is a chain reaction caused by the cryptocurrency crash. The company had previously lent $650 million to the cryptocurrency hedge fund Three Arrows Capital (3AC), but 3AC recently filed for bankruptcy in the British Virgin Islands court, leaving Voyager unable to recover the funds and facing a liquidity crisis. As a result, it temporarily suspended coin trading, withdrawals, and deposits starting from the 1st. Voyager CEO Stephen Ehrlich said on Twitter that day, "Our faith in the future of this industry remains strong, but due to the continued volatility in the cryptocurrency market and 3AC's default, we had to make this decision."
The cryptocurrency crash that began this year with the collapse of TerraUSD and Luna has now expanded into a domino liquidity crisis across the industry. 3AC, which was the direct trigger for Voyager's bankruptcy filing, is known to have suffered significant losses from the Terra and Luna crash. Coin lending company Celsius also temporarily suspended customer withdrawals last month due to market conditions. Singapore-based cryptocurrency lending company Vauld, invested in by Silicon Valley mogul Peter Thiel, recently suspended withdrawals, trading, and deposits and announced a moratorium (debt payment deferral).
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