Kyle Torpey
·1 min read
Crypto lender Voyager Digital announced on Wednesday that it will be winding down operations and returning approximately 35% of customers' cryptocurrency deposits. The approval of Voyager's liquidation plan by U.S. Bankruptcy Judge Michael Wiles allows the company to distribute around $1.33 billion in crypto assets to its customers, effectively ending its reorganization efforts under Chapter 11. Customers may expect to make withdrawals starting from June 1, with any additional distributions contingent upon future litigation outcomes.
Voyager had filed for bankruptcy protection in July, citing cryptocurrency market volatility and a default on a substantial loan granted to crypto hedge fund Three Arrows Capital (3AC). Despite two unsuccessful sales attempts during its bankruptcy proceedings, Voyager remains entangled in litigation with FTX, seeking to recover $445.8 million in loan repayments made to Voyager before FTX's own bankruptcy. The potential recovery for Voyager's customers hinges significantly on the resolution of the FTX litigation, with expected recovery increasing to 63.74% if Voyager emerges victorious, as stated in court filings.
To facilitate repayments, Voyager plans to refund customers with the same cryptocurrency they held in their accounts. However, for deposits involving unsupported cryptocurrencies and Voyager's proprietary VGX token, customers will receive repayment in the stablecoin USDC instead.
As an enthusiast and expert in cryptocurrency, blockchain technology, and financial markets, my expertise spans both theoretical knowledge and practical application in the field. I've closely followed developments in the crypto space, staying abreast of the latest news, trends, and legal intricacies.
Regarding the article discussing Voyager Digital's winding down operations and subsequent distribution of customers' cryptocurrency deposits, several concepts merit attention:
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Cryptocurrency Deposits: These are funds held by Voyager on behalf of its customers in various cryptocurrencies, subject to withdrawal or trading.
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Chapter 11 Bankruptcy: Voyager filed for Chapter 11 bankruptcy protection, a legal process that allows companies to reorganize their debts while continuing operations.
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Liquidation Plan Approval: The U.S. Bankruptcy Judge Michael Wiles approved Voyager's liquidation plan, permitting the distribution of approximately $1.33 billion in crypto assets to customers.
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Repayment Process: Customers can expect withdrawals starting from June 1, with the possibility of additional distributions contingent upon future litigation outcomes, notably regarding the litigation with FTX.
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Litigation with FTX: Voyager is engaged in litigation with FTX to recover loan repayments, with the outcome significantly impacting customer recovery percentages. Court filings suggest an increase in expected recovery to 63.74% if Voyager prevails.
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Refunding Customers: Voyager intends to repay customers using the same cryptocurrency held in their accounts. However, for unsupported cryptocurrencies and Voyager's VGX token, customers will receive repayment in the stablecoin USDC.
Understanding these concepts is crucial to grasp the implications of Voyager's situation, especially in terms of customer reimbursem*nts, bankruptcy proceedings, and the complexities of dealing with assets in the volatile crypto market.
