Crypto broker Voyager Digital files for bankruptcy following the collapse of Three Arrows

Illustration by Alex Castro / The Verge

In the wake of the collapse of Three Arrows Capital, a broker of cryptocurrencies filed for Chapter 11. Just a few days after 3AC filed for bankruptcy, Voyager filed for Chapter 11.

In a press release, the company states that it has more than $1 billion in assets on the platform, $110 million in cash and $350 million in an account for customers. The company still owes more than $600 million.

Stephen Ehrlich blames 3AC's failure to repay its debt for the company's financial troubles. The chapter 11 process provides a way to maximize recovery.

A Chapter 11 filing is used by companies when they plan to reorganize their debts. According to the press release, customers will be given a combination of the recovered funds from 3AC, company shares, and Voyager token, which are currently worth about 21 cents each. After reconciliation and fraud prevention is completed with Metropolitan Commercial Bank, customers with currentUSD deposits in their accounts will be able to regain access. The plan needs the court's approval.

After 3AC failed to repay its loan, Voyager stopped all trading, withdrawals, and deposits. In June, Sam Bankman- Fried, the billionaire CEO of trading firms FTX and Alameda Research, extended a $500 million line of credit to Voyager in an attempt to help it cope with the uncertain market. According to the Chapter 11 filing, Bankman- Fried invested $75 million in the company last year.

The temporary shut down of Celsius and Babel Finance before the bankruptcy of 3AC shows how intertwined the firms are. Vauld suspended all transactions earlier this week, but we don't know how the situation will go.