There is heightened public interest in what may be an increasing trend of digital asset bankruptcy filings and in the resulting legal and business issues which are both novel and complex. It’s in that vein, we provide this update on Voyager Digital (as we originally discussed here ).
Voyager Digital Holdings, Inc. and two affiliates
The first week of July has brought with it a flurry of activity in the digital asset markets – but not the type of activity that investors in the space likely hoped for.
On June 27th, Three Arrows Capital, Ltd. (“3AC”) commenced a liquidation proceeding in the British Virgin Islands, followed on July 1st by a Chapter 15 case in the Southern District of New York. Chapter 15 generally provides for recognition by a US court of an insolvency proceeding in a non-US jurisdiction. The company, a proprietary trading fund, is now under the control of joint liquidators tasked with stabilizing the estate, preserving and winding up its assets, investigating claims and pursuing causes of action under the laws of BVI. Should the BVI proceeding be recognized as a “foreign main proceeding,” the case will provide the liquidators some stability through the enforcement of the automatic stay over the firm’s US assets, preserving the status quo.Continue Reading Cryptocurrency Hedge Fund Three Arrows Capital and Platform Voyager Digital Resort to Bankruptcy for Relief
Celsius Networks (“Celsius”) became the latest cryptocurrency platform to raise market temperatures by halting all withdrawals, swaps and transfers from and between its customers’ accounts on June 12, 2022. Celsius touted a next wave of “unbanking,” operating a lending platform allowing the holders of digital assets the opportunity to earn a significantly high returns on those assets. Due, in part, to the lack of regulation, Celsius, and other firms like it, retain wide discretion to use of their customers’ assets and, among other things lend those assets to other platforms at higher rates, enter into complex swap and option transactions that bet on price movements, enter into repo or other lending arrangement to increase yield, or invest in other cryptocurrency projects, all without regulatory constraint. Indeed, it was this broad discretion that led, in part, to the downfall of a similarly situated platform, Cred, Inc., and its ultimate bankruptcy discussed here on Restructuring Matters.Continue Reading Celsius Networks’ Warnings Highlight Crypto Bankruptcy Risks
Given the recent media coverage and growing concerns among investors over the risks associated with a bankruptcy filing of a cryptocurrency exchange, it feels timely to highlight some issues that arose in the Chapter 11 cases of Cred Inc. and certain of its affiliates (collectively, “Cred”). For more updates on significant bankruptcy, restructuring and insolvency topics, subscribe to Restructuring Matters.Continue Reading Lessons from Recent Cryptocurrency Bankruptcy Case: Cred, Inc.