In an industry where counterparties are deeply bound together by a weave of debt and purchase, dominoes can drop fast and hard.

At its height, Voyager Digital boasted 3.5 million users and $5.9 billion in assets, comparable to a small regional bank or respectable wealth management firm.

Ninety-seven percent of Voyager’s customer stored less than $10,000 on the platform, indicating a wide base of individual lenders. It was a crypto lending and trading powerhouse – one of the few digital benefit brokerages register on stock markets anywhere in the world.

Voyager’s future, until recently, looked bright. Leadership appeared barely able to think up of a bear market, much less its outcome. Speaking in 2021, CEO Steve Ehrlich said that “I think the market looks totally different today from what it looked like in 2017. We all remember 2017.”

As it turns out, 2021 was literally a lot like 2017 – both were quickly followed by a savage crypto market crash. Ehrlich’s sunny confidence has yielded a rotten harvest.

The Jersey City, N.J.-based company is now known to have made enormous unsecured loans to Three Arrows Capital (3AC). That failed fence fund now appears to have backtrack on all of its obligations, and its founders are reportedly escape.

That alone was seemingly a mortal wound. On July 1, Voyager froze consumer funds.

Voyager is in a bleak situation. “The borrower are facing a short-term ‘run on the bank,’” according to declaration Ehrlich filed alongside bankruptcy papers. But, also according to Ehrlich (who did not answer to a request for comment for this story), Voyager has a shinning future: “Debtors have a workable business and a plan for the future.”

So how did a once tough and well-regarded crypto lending outfit get here?

Short version: Voyager was pretty good at atturing deposits. When it came to lending that money out … not so good deal of.