The bear market is in full swing and some crypto companies are starting to feel the heat.
Cryptocurrency broker Voyager Digital Ltd has filed for Chapter 11 bankruptcy. This latest development comes as the bear market begins to affect the activities of various cryptocurrency firms.
The firm filed for bankruptcy in the US Bankruptcy Court for the Southern District of New York. as per filingVoyager controls between $1 billion and $10 billion in assets.
In addition, the firm had approximately 100,000 creditors at the time of the bankruptcy filing.
This latest development comes just a week after Voyager issued a notice of default to crypto hedge fund Three Arrows Capital (3AC). 3AC borrowed 15,250 bitcoins from Voyager and $350 million in stablecoin USDC, bringing the total amount to $675 million.
Voyager CEO Stephen Ehrlich commented that;
“While I strongly believe in this future, the prolonged volatility and transition in the crypto markets over the past few months and the default of Three Arrows Capital requires us to take deliberate and decisive action now. Chapter 11 Process Maximum Recovery Provides an efficient and equitable mechanism for
3AC’s troubles began a few weeks ago when the cryptocurrency market posted massive losses following the $60 billion collapse of algorithmic stablecoin TeraUSD (UST) and its sister cryptocurrency Luna.
The cryptocurrency hedge fund held nearly $200 million in LUNA and also suffered losses with its $40 million investment in staking ether (stETH). Despite having more than $3 billion in assets under management, losses following UST’s crash severely affected 3AC.
Following Three Arrows’ failure to meet margin calls, Voyager obtained a line of credit from the investment arm of Alameda Research. The firm received two lines of credit, $200 million in cash and USD coins, and 15,000 bitcoins from Alameda Ventures.
Voyager has joined the list of cryptocurrency firms that are currently struggling to stay afloat. BlockFi and Celsius are some of the major crypto lenders in the ecosystem and have struggled to continue operating as the bear market hit hard.