Cryptocurrency lender Voyager Digital has filed for Chapter 11 bankruptcy in New York.
The company based in Toronto, Canada, was heavily exposed to collapsed hedge fund Three Arrows Capital, which itself filed for bankruptcy recently.
Three Arrows filed for a Chapter 15 petition after a court in the British Virgin Islands ordered it to liquidate.
Voyager estimates that it has more than 100,000 creditors, with liabilities in the range of $1 billion to $10bn. It said its assets are also worth between $1bn and $10bn.
Reports suggest that Voyager’s loan book accounted for around half of its total assets, with loans to Three Arrows making up to 60% of that loan book.
Voyager’s stock price was above $20 last November but fell below $1 last month amid the crypto crash. It is currently trading at 27 cents, with a market cap of around $50m.
The company is also coming under fire for claiming in marketing materials that investors’ deposits were protected by Federal Deposit Insurance Corporation (FDIC) insurance.
This would be the case in the event that its bank failed – the Metropolitan Bank of New York – but not if the company itself failed. It also does not apply to stablecoins.