Crypto broker Voyager Digital Ltd. has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court of the Southern District of New York.
Voyager's estimated assets and liabilities are between $1 billion and $10 billion. Toronto company estimates 100,000 creditors.
Three Arrows Capital (3AC) borrowed $675 million from Voyager in the form of 15,250 bitcoin and $350 million in stablecoin USDC.
Voyager CEO Stephen Ehrlich said, "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."
3AC's troubles came amid a weeks-long selloff in the digital assets market, exacerbated byTerraUSD (UST) and Luna's $60 billion collapse last month.
Three Arrows Capital, which managed $3 billion in April, held $200 million in Luna and $40 million in staked ether (stETH), a derivative of Ethereum's native cryptocurrency, ether.
3AC reportedly placed an overleveraged bet on the Grayscale Bitcoin Trust (GBTC) to arbitrage the value difference. GBTC shares have traded at a discount since February 2021, which recently widened to 30%.