Cryptocurrency broker Voyager Digital files for bankruptcy protection

theguardian.com:

A US cryptocurrency broker and lender has filed for bankruptcy protection, becoming the latest domino to fall in the embattled digital asset market.

Voyager Digital had suspended all withdrawals and trading last week but said “volatility and contagion” in the crypto markets had forced it into a Chapter 11 filing, which shields a business from creditors while it explores strategic alternatives.

The cryptocurrency market has slumped since its $3tn (£2.5tn) peak last November to less than $1tn, with the decline accelerating in May when a multi-billion dollar cryptocurrency, Terra, collapsed.

The ensuing market rout triggered difficulties at a crypto-focused hedge fund, Three Arrows Capital, which owed money to Voyager and last week was lined up for liquidation.

“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,” said Voyager’s chief executive, Stephen Ehrlich.

In its Chapter 11 bankruptcy filing on Tuesday, Voyager, based in New Jersey, estimated that it had more than 100,000 creditors and somewhere between $1bn and $10bn in assets, and liabilities worth the same value.

Voyager is a crypto firm that offers broking services – finding the best prices for cryptocurrencies that customers want to buy or sell – as well as borrowing digital assets from customers in exchange for yields of up to 12%, and then lending them out.

Carol Alexander, professor of finance at the University of Sussex business school, said Voyager’s troubles were part of a crypto credit crisis, but argued that was “not a bad thing at this stage”.

“During the latest bitcoin