An unexpected drop in crypto prices caused liquidity issues among hedge funds and trading sites, leading to defaults – in turn leading to numerous collapses of crypto lenders, including Voyager.
Concerns have been expressed by customers following the firm’s bankruptcy filing, that their funds may not be returned. Here is what you need to know.
1. Binance US reportedly preparing to relaunch a bid for Voyager
Many Voyager customers are feeling abandoned following the firm’s collapse. One woman speaking at a bankruptcy hearing only wanted to identify by her first name reported that her savings totaling more than $1 Million are trapped on Voyager; they had saved for 24 years to fund their children’s college educations.
Another customer told the court she had experienced similar difficulties investing in tokens on Voyager’s platform and participating in its yield-generating programs, investing over seven figures which remain on its app since withdrawals have since been suspended.
Federal regulators have instructed Voyager Digital not to mislead customers into thinking their deposits are insured by the FDIC, as that claim could raise national security issues that could see its deal blocked or altered by CFIUS. According to traders, Binance US may soon submit its bid on these assets from FTX’s auction in September.
2. Scammers are targeting Voyager’s customers
As the crypto lending sector remains turbulent, investors are left asking: “Where did my money go?” Blockchain researchers may be able to piece together what was deposited, but it remains difficult to know exactly how much was hypothecated or loaned out – this has resulted in litigation from disgruntled investors such as Voyager customers against billionaire Mark Cuban and Dallas Mavericks owner Dwight Howard.
Voyager Digital’s recent decision to reopen for 30 days following their bankruptcy court-supervised liquidation process may have opened the door for scammers as reported by Bloomberg on August 1. Unfortunately, Bloomberg noted on August 1 that many clients of Voyager Digital may now have difficulty withdrawing assets that remain.
Voyager attorney Darren Azman recently informed a judge overseeing its bankruptcy proceedings that bad actors are targeting its customers with fake websites that promise higher returns, then unwitting users link their wallets with them and see their funds vanish into thin air. So far, scammers have targeted only a limited number of customers according to Azman.
3. Voyager’s plan to reimburse creditors
As more crypto lenders go bankrupt, concerns over customer funds have arisen. Some lenders, like BlockFi, owe investors millions of dollars; others have been accused of lending directly to hedge funds with uncommingled funds.
Voyager customers left in limbo have received some optimism following news that its bankrupt company could begin distributing assets directly to creditors within weeks, according to its committee of unsecured creditors. Voyager’s bankruptcy plan allows for such direct distributions of assets.
Voyager’s announcement of potential payout has provided much-needed hope to many of its stranded customers, who have been waiting months to receive their assets. If opposed by parties or their proposal changes significantly, Voyager could take longer than planned to complete its process and complete a payout. Meanwhile, its potential payout has created significant speculation regarding their future and larger cryptocurrency implications as well as whether Voyager should be trusted with funds.
4. Voyager’s bankruptcy filing
Voyager Financial Group filed for Chapter 11 bankruptcy protection due to prolonged market volatility and Three Arrows Capital’s default, among other reasons.
U.S.-listed crypto lender Lend Up currently owes $75 million to Sam Bankman-Fried’s Alameda Research and $960,000 to Google according to filings, as well as $270 million through its “For the Benefit of Customers” account at Metropolitan Commercial Bank of New York.
The bankruptcy filing by Voyager marks yet another instance of crypto firms experiencing financial difficulty, with several having had to restrict or halt withdrawals in recent weeks. Frances Coppola from CNBC refers to it as the “cryptopocalypse,” taking down major players step by step. Her report cited how Voyager advertised that users’ deposits were insured through FDIC when in reality this only applied when funds were held as bank deposits rather than converted to stablecoins.