Voyager File For Bankruptcy And Settlement Plan

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2022-09-27 22:21:43

Market situation

US stocks had a day of gains in all three Dow Jones, S&P 500 and Nasdaq indexes. Stock futures also rose slightly. Oil price continued to fall to 98 USD/barrel. Gold is at 1742 USD/ounce.

Bitcoin fluctuates around $20,000. Altcoins have not changed much.

Last June, there were signs of a lot of selling from small miners. This is an influential selling force in the market. Most of the large, financially strong miners are unaffected and they continue to store BTC.

The number of BTC on exchanges has dropped sharply recently due to concerns related to many platforms stopping crypto withdrawals such as Celsius, 3AC, etc. In contrast, Ethereum has more ETH on the exchange.

The market yesterday received the release of the minutes of the FED meeting in June. The information was nothing new and the market did not react much. The FED said it will continue to raise interest rates by 0.5% to 0.75% in the July meeting. If inflation worsens, the FED may use stronger measures.

The US Bureau of Labor Statistics announced that the number of jobs fell sharply in May but still outstripped the level of job seekers. Total employment was 11.25 million for May, down significantly from 11.68 million in April. Despite the decline, job openings were still better than the 11.04 million estimate from FactSet. At the same time, the number of jobs remains high compared to the number of 5.95 million unemployed in the month, meaning that there are 1.9 jobs for every worker.

While the Fed raised rates, mortgage rates fell for a second straight week, but that didn’t revive demand from homeowners or potential buyers because of financial recession concerns. The average contract rate for 30-year fixed-rate mortgages with matched loans dropped from 5.84% to 5.74%. Recession fears surfaced in applications to refinance a home loan, which fell 8% for the week and was down 78% from the same week a year ago.

Voyager filed for bankruptcy

Voyager Digital has filed for Chapter 11 bankruptcy citing market volatility and the collapse of its debtor, Three Arrows Capital (3AC). If approved for Chapter 11 bankruptcy, Voyager will have all assets protected during the company restructuring.

As reported in Chapter 11, Voyager currently has assets between $1 billion and $10 billion and more than 100,000 creditors. Specifically, the company says it has about $1.3 billion in crypto assets on its platform and claims more than $110 million in cash and crypto assets on hand, which will help it maintain maintain day-to-day operations during bankruptcy. They are holding $1.3 billion in crypto assets and $650 million in loans to the company 3AC. In addition, Voyager has $350 million in cash on behalf of customers held in Metropolitan Commercial Bank accounts.

Customers who deposit in cash and are held by Metropolitan Bank will receive their deposit back. As for customers sending in crypto, CEO Stephen Ehrlich offers a solution:

  • The sender will get back a portion of their crypto they sent.

  • Receive compensation when Voyager collects the amount owed from 3AC.

  • Voyager will build a new company, from which it will issue shares and use part of it to compensate those who suffer.

  • Compensation in Voyager tokens.

Voyager’s above proposal is being voted on by the affected people. Most of them do not like this solution. One of them is Alameda company, Voyager’s big creditor does not accept the above plan.

Alameda Research last month extended a $500 million loan line to Voyager Digital. However, it itself owes Voyager $377 million, according to Voyager’s Chapter 11 bankruptcy filing. Earlier, Alameda said that it had about $2 billion in cash available that could support a number of companies that were struggling, but that they still owed and were also Voyager’s lenders.

In the past, states including Alabama, Texas, New Jersey and several others in March brought actions against Voyager for allegedly selling unregistered securities to people in their states. At the time, Voyager said it disagreed that its products, which pay high returns to customers on crypto deposits, were securities. Now, this investigation is expanding to include a withdrawal freeze and Voyager bankruptcy.

Other information:

  • Ethereum has moved “the Merge” on the Sepolia testnet. The leading blockchain smart contract is set up for one final testnet launch before its mainnet deployment.

  • Cryptocurrency lender Celsius Network is looking to restructure its operations. They hired attorneys Akin Gump Strauss Hauer & Feld LLP to assist in the restructuring process to overcome financial difficulties.

  • Elon Musk’s Boring Company has launched a way for customers to pay for rides on the Loop, their Las Vegas transit system, with Dogecoin cryptocurrency. Currently, the highway tunnel allows passengers to travel in human-driven Tesla vehicles at about 35 mph, and will increase this speed when completed.

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