The crypto brokerage firm Voyager Digital filed a petition under Section 11 of the US Bankruptcy Code, becoming the latest victim of the chaos in the digital assets market.
Voyager filed its petition in a New York court last Tuesday, according to official records, which includes digital assets worth between $1 billion and $10 billion and liabilities of similar size.
In a statement, the company said it currently holds $1.3 billion in cryptocurrency on its platform and more than $350 million in cash in the New York Metropolitan Commercial Bank.
The company suffered huge losses after the collapse of the cryptocurrency hedge fund Three Arrows Capital which went bankrupt last week.
According to Voyager’s CEO, Stephen Ehrlich, “we believe in the future of the cryptocurrency industry, but increased market volatility and the bankruptcy of Three Arrows Capital led us to make this decision.”
Shares of the Toronto-based company have lost almost 98% of their value by early 2022.
Voyager stressed that it continues to pursue the recovery of its investments in Three Arrows Capital (3AC) through legal channels.
It should be noted that Voyager had lifted any trades on its platform last week given the crisis in the cryptocurrency market.
Many other companies such as Celsius, Babel Finance and Vauld have taken similar steps. On Tuesday Vauld received a takeover offer from competitor Nexo.
The wider cryptocurrency market is facing a huge liquidity problem given the “digital bank run” by investors, at a time when the value of cryptos continues its downward trend.
The market decline started after the tightening of the monetary policy of Fed and worsened after the disorderly collapse of the algorithmic stablecoin TerraUSD which cost investors $60 billion.
At the same time, Bitcoin recorded a drop of 38% in June, just as investors are preparing for the upcoming “cryptocurrency winter”.