The cryptanalym sector's troubles deepened Wednesday as the broker Voyager Digital Ltd. filed for Chapter 11 bankruptcy protection.
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A filing shows that the firm and two affiliates, Voyager Digital LLC and Voyager Digital Holdings, took the step in the Southern District of New York.
Chief executive officer Stephen Ehrlich said on Twitter that we strongly believe in the future of the industry but the prolonged volatility in the markets and the default of Three Arrows Capital.
Late last week, Voyager Digital temporarily suspended trading, deposits and withdrawal due to challenging market conditions. Since a peak last year, about $2 trillion in market value has been wiped out of the sector due to a wave of monetary tightening that drained liquidity and blew up leveraged bets.
The Voyager platform has temporarily suspended trading, deposits, withdrawals and loyalty rewards, according to Ehrlich.
Sam Bankman-Fried, co-founder of FTX US, had acted as a lender of last resort for Voyager by providing credit lines via Alameda Research. Voyager filed $75 million of unsecured loans from Alameda, making the firm the biggest single creditor.
New-York based Voyager is the latest in the digital-asset sector to hit trouble. The hedge fund Three Arrows Capital, to which Voyager had lent hundreds of millions of dollars, was ordered into liquidation last month after failing to repay creditors.
Voyager offered a way of earning rewards for holding certain cryptocurrencies and yield products. As the liquidity dried up, firms offering high-yield products such as Celsius Network, Babel Finance and Vauld have suspended withdrawals.
Voyager issued a notice of default to Three Arrows Capital last month on a loan worth $675 million. It is actively pursuing recovery from the troubled hedge fund, including through the court-ordered liquidation process in the British Virgin Islands.
The latest filing slowed the markets of criptocurrencies. As of 1:31 p.m. in Singapore, the price of cryptocurrencies fell by 2.4% to $19,950.
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