![]() ![]() “The Debtors are facing a short-term ‘run on the bank’ due to the downturn in the cryptocurrency industry generally and the default of a significant loan made to a third party,” Ehrlich said in the dry language of a filing made in bankruptcy court in New York. Yet the story of how it fell, and what comes next, may show how the industry can pick itself up and get back on its feet. It was the latest victim in the cryptocurrency crash of 2022. Just five months later the company, which is based in Jersey City, NJ, and has $1.3B of assets, filed for Chapter 11 bankruptcy. In 2021, Voyager Digital raked in $415M in revenue, a 59-fold jump from the previous year. ![]() What happened next is a cautionary tale about the perils of counterparty risk, and how crypto, despite the promise of blockchain technology, is not immune to the same dangers and mistakes that have long plagued traditional finance. It agreed to provide Voyager with $200M in cash and a revolving credit line financed by 15,000 Bitcoin even though Voyager was under enormous stress. Enormous StressĪnd they reached out to Alameda Research, the trading firm co-founded by Sam Bankman-Fried, the billionaire crypto impresario. ![]() They hired a Wall Street Investment bank to rustle up a potential savior. Voyager CEO Stephen Ehrlich and his team embarked on a mad scramble to save their four-year-old company from the type of bank run that is wreaking havoc across the crypto sector. Three Arrows Capital, the Singapore-based hedge fund, owed it hundreds of millions worth of crypto and showed no signs of servicing the debt. In late June, the top executives at Voyager Digital, a cryptocurrency exchange with 3.5M users, knew they were in deep trouble. ![]()
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