Cryptocurrency broker Voyager Digital filed for bankruptcy on Tuesday in the wake of the collapse of the foremost crypto hedge fund Three Arrows Capital (3AC). Voyager’s Chapter 11 filing comes appropriate days after 3AC filed for bankruptcy — and about per week after 3AC defaulted on a loan supplied by Voyager.

In a press liberate, Voyager Digital states that it has about $1.3 billion payment of crypto belongings on the platform, $110 million in cash and crypto belongings readily available, and the $350 million it holds in an FBO (For-Profit-Of) yarn for customers. It also says 3AC soundless owes better than $650 million.

Voyager CEO Stephen Ehrlich blames the company’s financial struggles on “the prolonged volatility and contagion in the crypto markets” in addition to 3AC’s failure to repay its debt. “The chapter 11 task presents an ambiance pleasant and equitable mechanism to maximize recovery,” Ehrlich added.

Companies love Voyager Digital use a Chapter 11 filing when they knowing on reorganizing their cash owed while soundless best likely operational. Voyager Digital outlined a proposed route of action in its press liberate, bringing up it will give customers “a mixture” of the crypto held in their accounts, the recovered funds from 3AC, company shares, and Voyager tokens (which are at the 2nd payment about 21 cents every). The company says customers who at the 2nd bear USD deposits in their accounts will easiest get get hold of admission to “after reconciliation and fraud prevention task is accomplished with Metropolitan Commercial Bank.” This knowing soundless needs to be popular by the court.

Voyager paused all trading, withdrawals, and deposits final week after asserting that 3AC failed to repay its loan. In June, Sam Bankman-Fried, the billionaire CEO of trading companies FTX and Alameda Research, extended a $500 million line of credit ranking to Voyager in an are attempting and relieve it address the unsafe market. Bankman-Fried’s Alameda Research also invested $75 million in Voyager final year, which the Chapter 11 filing lists as the company’s largest unsecured claim.

The crypto smash is showing appropriate how intertwined crypto companies genuinely are, with the temporary shutdown of crypto lenders Celsius and Babel Finance previous Voyager and 3AC’s bankruptcy filings. Earlier this week, crypto lending and trading startup Vauld also suspended all transactions, nevertheless it appears to be like to be we’re yet to locate how a long way the fallout will reach.