U.S. crypto lender Voyager Digital said on Wednesday it had filed for bankruptcy, becoming another casualty of a dramatic fall in prices that has shaken the cryptocurrency sector.
Crypto lenders such as Voyager boomed in the COVID-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. However the recent slump in crypto markets – sparked by the downfall of two major tokens in May – has hurt lenders.
New Jersey-based Celsius in June froze withdrawals and has hired advisers on a possible bankruptcy filing. Voyager froze withdrawals this month, as did another lender, Singapore’s Vauld.
Last week, Voyager said it had issued a notice of default to Singapore-based crypto hedge fund Three Arrows Capital (3AC) for failing to make payments on a crypto loan totalling over $650 million.Â
3AC later that week filed for chapter 15 bankruptcy, which allows foreign debtors to shield U.S. assets, becoming one of the highest-profile investors hit by plummeting crypto prices. 3AC is now being liquidated, Reuters reported last week.
“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,” Voyager Chief Executive Officer Stephen Ehrlich said in a statement.
