One of the biggest victims of the crypto crash, Voyager Digital, is back in the news today. But, interestingly enough, investors are seeing some good coming with the bad. The lucky group still holding onto their Voyager Token (VGX-USD) crypto in the hopes of a bailout is happy to see it soaring today. The gains come alongside news that the company will be offloading its few remaining assets in the next week.
Voyager Digital, Three Arrows Capital, and Celsius (CEL-USD) make up the big three crypto institutions chopped down dramatically by the crypto crash. Their stories prove the dangers of getting carried away by the prospects of big gains. Each, like many retail investors, was enticed by the regulation-free DeFi loans with exceedingly low collateralization.
Leading up to the crypto plummet in May, Voyager Digital, like its peers, was vastly over-leveraging loans with DeFi platforms. These loans allowed it far more assets to stake elsewhere, essentially multiplying their gains. But when prices dipped tremendously, the assets Voyager collateralized with these lenders were far less valuable. It fell subject to margin calls it couldn’t pay off and began the fast descent into bankruptcy.
Just before its bankruptcy, the company revealed a multi-hundred billion dollar exposure to Three Arrows, which defaulted first. This forced the company into freezing all investors’ deposits, withdrawals, and rewards earned through its services. This has become especially controversial in recent days as it comes to light that Voyager Digital was still taking and freezing buy orders. Since then, these investors have been clamoring to get their assets back. They remain furious at the decision, whilst Voyager navigates a Chapter 11 bankruptcy where it hopes to be bailed out.
Voyager Digital Heads to Auction, Prompting Price Swing for VGX Crypto
After already scoffing at an offer from FTX, it now appears the company will be heading to the auction block with what few assets remain on its balance sheet.
FTX’s offer was very obviously not what Voyager Digital had in mind. The company complained Sam Bankman-Fried’s company offered a low-ball sum to buy it out. Fortunately for Voyager, though, several other companies have apparently made more savory offers — so much so that the court will be handling the bidding war.
In early August, the company said it had a multitude of suitors looking to win it over. However, it did not reveal who these potential buyers were. Well, investors will have a chance to find out in the next week. The court has ruled Voyager Digital’s remaining assets will go to an auction-style sale where companies will bid to buy it out.
Bidders submitted offers through Sept. 6, an extended date from the initial Aug. 26 deadline. Of the 22 companies Voyager claims have offered it a bailout, it is unclear currently how many submitted a formal bid. After the auction next week, the winner will be confirmed by the court in a September 29 hearing.
The news is a sigh of relief for Voyager Digital customers. With a bailout in the works, Voyager can move on and return the frozen assets. It’s also invigorating investors brave enough to hold onto Voyager’s VGX crypto through these proceedings.
Holding VGX was a big bet that Voyager really could make its way out of bankruptcy. After all, Chapter 11 bankruptcy filings only really prove successful less than 10% of the time. As this news breaks, then, the token is soaring 33%, taking prices above $1 for the first time since June.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.