The bear market is in full swing and some cryptocurrency 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 affecting the activities of various cryptocurrency firms.
The firm filed for bankruptcy in the U.S. Bankruptcy Court of the Southern District of New York. Per the filing, Voyager controls assets worth between $1 billion and $10 billion.
Furthermore, the firm has around 100,000 creditors at the time of filing the bankruptcy.
This latest development comes just a week after Voyager issued a notice of default to crypto hedge fund Three Arrows Capital (3AC). 3AC had borrowed 15,250 bitcoins and $350 million in stablecoin USDC from Voyager, bringing the total sum to $675 million.
Voyager CEO Stephen Ehrlich commented that;
“While I strongly believe in this future, the prolonged volatility and contagion in the crypto markets over the past few months and the default of Three Arrows Capital require us to take deliberate and decisive action now. The chapter 11 process provides an efficient and equitable mechanism to maximize recovery.”
3AC’s troubles began a few weeks ago when the cryptocurrency market recorded huge losses following the $60 billion collapse of algorithmic stablecoin TerraUSD (UST) and its sister cryptocurrency Luna.
The cryptocurrency hedge fund held about $200 million in LUNA and also suffered losses with its $40 million investment in staked ether (stETH). Despite having over $3 billion in assets under management, the losses that followed UST’s crash severely affected 3AC.
Following Three Arrows’ failure to meet margin calls, Voyager obtained credit lines from the investment branch of Alameda Research. The firm obtained two lines of credit from Alameda Ventures, $200 million in cash and USD Coin and 15,000 bitcoins.
Voyager joins a list of cryptocurrency firms currently struggling to stay afloat. BlockFi and Celsius are some of the leading crypto lenders in the ecosystem and have struggled to continue operations as the bear market bites harder.
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