Nascar Sponsor Files Bankruptcy

When they first entered NASCSC
AAR
R in 2021 it was kind of a big deal. Voyager Digital wasn’t the first cryptocurrency sponsor in the sport, but they were the first to go “all-in” becoming a primary sponsor for Landon Cassill in the Xfinity series. They were also the first sponsor to pay for their sponsorship using cryptocurrency.

It seemed a match made in sponsorship heaven for Cassill, a longtime cryptocurrency enthusiast who is adept at walking people through the sometimes-confusing world of crypto and the blockchain.

The sponsorship seemed to be working well as earlier this year it was announced that Voyager Digital would be back for 2022, and would include some races in NASCAR’s top tier Cup series. In fact, the company itself seemed to be doing well as Voyager Digital was said to have 3.5 million users and $5.9 billion in assets.

All good things must come to an end however, and that has never been truer than in the world of cryptocurrency. The currency, which only exists electronically, has fallen into what investors call a “crypto winter.” Cryptocurrencies have lost $2 trillion in value since last year.

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This isn’t the first time the bubble surrounding cryptocurrency has burst. It also happened in 2018. But unlike that ‘crypto winter’ driven largely by initial coin offerings that ended with many companies failing, this time the downfall parallels the stock market’s fall. This in addition to other factors including the raising of interest rates, and inflation.

This has led to several cryptocurrency firms failing and that includes Voyager Digital which on July 5 filed for Chapter 11 bankruptcy in the Southern District of New York. For now, the company plans to keep operating, this week releasing a recovery plan and telling users they will get their funds back, “subject to a reconciliation and fraud prevention process.”

Voyager Digital was also one of the first cryptocurrency firms to trade on the stock market, although the Canadian market. Wednesday the stock closed as .1675 having lost 98.56 percent of its value in the last year.

Part of the filing disclosed that the company’s assets include crypto-assets come in at approximately $1.3 billion, plus a $650 million debt owed by Three Arrows Capital (3AC).

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It seems that 3AC might have been the firm that fueled Voyager’s downfall.

Voyager Digital is alleged to have made enormous unsecured loans to 3AC, among several others. For its part the 3AC hedge fund seems to have defaulted on all its obligations, and its founders are reportedly fugitives and are not cooperating with authorities regarding the company’s bankruptcy process. It remains to be seen then if Voyager will ever recover the $650 million debtor balance from 3AC.

In the filing Terra LunaLUNA
is also mentioned. Terra is an open-sourced blockchain protocol created by Terraform Labs. Terra Luna issued “TerraUSDUST
” an algorithmic stablecoin that also failed causing that company to collapse.

There could be some hope for the company. KaJ Labs announced that this week it has issued a Letter of Intent (LOI) to Voyager Digital Holdings to acquire the assets of firm. According to the LOI KaJ Labs wants to purchase the remaining qualified assets of Voyager Digital Holdings primarily the functional suite of APIs and mobile apps Voyager Digital provided to that allowed people to trade multiple types of digital assets.

What all this means for the future of the NASCAR sponsorship for Cassill and the Kaulig Racing team is uncertain. The No. 10 car is entered in this weekend’s Xfinity race at New Hampshire with a different sponsor and calls and emails to the team went unanswered.