VYGVF Stock Falls as Voyager Digital Files for Bankruptcy

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Another day, another bankruptcy in the cryptocurrency sector as a brokerage digital travel (OTCMKTS:VYGVF) is seeking Chapter 11 protection from its creditors. The stock of VYGVF decreases in response.

Voyager Digital, which is listed on the Toronto Stock Exchange in Canada and on the over-the-counter markets, announced that it has commenced bankruptcy proceedings in the United States Bankruptcy Court for the Southern District of New York. The news drives down the cryptocurrency brokerage’s stock price today. VYGVF stock has already fallen 98% this year to trade at 27 cents a share.

What happened

In its bankruptcy filing, Voyager Digital listed debts between $1 billion and $10 billion and said it had $1.3 billion worth of cryptocurrencies left on its platform and $350 million cash. Voyager last week halted all withdrawals, deposits and trading activities on its platform, citing “current market conditions”.

The situation at Voyager Digital has deteriorated rapidly in recent days after cryptocurrency hedge fund Three Arrows Capital, which went into liquidation last week, defaulted on a $650 million loan payment. dollars he owed Voyager.

On Twitter (NYSE:TWTR), Stephen Ehrlich, CEO of Voyager, wrote, “We strongly believe in the future of the industry, but the prolonged volatility in the crypto markets and the failure of Three Arrows Capital forces us to take this decisive step.

Voyager said the bankruptcy proceedings would allow it to restructure so that customers could eventually be reimbursed.

why is it important

The entire cryptocurrency market is currently in the throes of a severe liquidity crunch as lenders and exchanges fail to cope with a rush of withdrawals from customers wanting to withdraw their digital coins and tokens as prices continue to fall. Several other crypto companies including Celsius, Babel Financeand Vaulthave halted withdrawals in recent days.

The broader cryptocurrency market continues to sell off as investors dump riskier assets and turn to safe havens as fears of a global recession escalate. Bitcoin (BTC-USD), the world’s largest digital coin, had its worst month on record in June, dropping almost 40% and falling below the key support level of $20,000. BTC-USD is currently trading slightly above the $20,000 mark.

What’s next for VYGVF shares

Already down 98% this year, VYGVF shares are expected to fall further today following the announcement of the bankruptcy filing. It remains to be seen whether Voyager Digital will emerge from its bankruptcy filing and restructuring and whether customers will get their money back. The whole situation in the cryptocurrency industry is deteriorating and investors should be careful with digital coins and tokens.

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As of the date of publication, Joel Baglole had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a reporter for the Wall Street Journal and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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