A bankruptcy filing by Voyager Digital, an exchange that has filed for Chapter 11 protection in July of 2022, indicates that the exchange will be bought out by Binance.US for $1 billion in assets. In addition, Binance will make a good-faith deposit of $10 million, and reimburse Voyager for certain expenses.
Bankrupt crypto exchange Voyager Digital filed for Chapter 11 bankruptcy protection in July 2022
If you have been a customer of Voyager Digital, you may have heard that the company filed for Chapter 11 bankruptcy protection in July 2022. Interestingly, the bankruptcy filing is a voluntary one. That means that the company is attempting to keep its operations going and protect its assets.
The firm owes nearly $650 million in loans to Three Arrows Capital, a Singapore-based hedge fund. As part of its reorganization plan, the company has notified all its customers that they will receive a combination of cryptocurrencies. Its plan includes a mix of US dollars and a variety of cryptocurrencies such as USDC and Voyager tokens.
In the filing, Voyager Digital stated that it had $1 billion to $10 billion in assets. In addition, it estimated that it had more than 100,000 creditors.
A number of cryptocurrency companies have recently come under scrutiny as solvency issues have arisen. These include CoinLoan, Celsius, Nexo, and BlockFi. The company also suspended trading and withdrawals, and has temporarily suspended loyalty rewards.
Binance US will make a $10 million good faith deposit
Binance US, a branch of the world's largest crypto exchange, has offered to buy the bankrupt assets of Voyager Digital. It has also agreed to make a good faith deposit of $10 million. In return, the company will pay off certain expenses of Voyager.
Voyager, the crypto exchange, filed for bankruptcy protection in July. It was one of several companies that suffered from financial distress during a period of volatile crypto trading.
Voyager's main rival at the time was the now defunct FTX US. The exchange suffered from liquidity issues. In addition, it was subject to regulatory objections. As a result, FTX went belly up.
Following FTX's downfall, Voyager attempted to find a buyer for its assets. It enlisted the aid of the Federal Reserve Board and other institutions. It then filed for voluntary reorganization on July 5, 2022, a move that would return as much as 72% of the value of its assets to creditors.
Binance will reimburse Voyager for certain expenses
The crypto industry has seen its share of turmoil over the last few months. Two of the largest exchanges in the space have filed for bankruptcy, FTX US and Voyager Digital Holdings Inc. The FTX one has gone the way of the dodo while Voyager has had to reclaim over $650 million of customer funds.
The latest news on the block is that Binance has entered the fray in the hopes of redeeming itself from the molecular level of the FTX snafu. While Binance has not yet formally bailed out Voyager, it has recommitted itself to doing so if the former falls through. It is also in the process of liquidating some of its own reserves to help settle the deal. The question is whether it can actually pull off the feat.
Voyager's board was busy looking for a buyer for its assets after FTX went under in November. Binance was the first to pique its interest in the coveted prize. The crypto community has been abuzz with speculation on the fate of Voyager's digital assets.
Grayscale Bitcoin Trust may delay approvals for a Bitcoin exchange-traded fund
Grayscale Bitcoin Trust has been under scrutiny after it applied to the Securities and Exchange Commission to convert its flagship fund into an ETF. The SEC cited concerns about market manipulation.
According to reports, the SEC has been delaying a decision on whether to approve the conversion. The firm claims that it has received strong support from investors and industry players, but has yet to be approved by the regulator.
Last week, the SEC met with Grayscale Investments to discuss the issue. The firm's lawyers claimed that there is no legal reason to reject the application.
Meanwhile, the SEC has asked for public comments. The agency has allowed for comments on its proposal to change the rules to allow exchange-traded funds to buy and sell shares of a spot-based product.
The SEC also postponed the decision on the application of Bitwise, which also wants to launch a spot-based product. This puts the SEC in the unusual position of having an ongoing relationship with the spot-based ETF applicants.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.