Magnolia was among the many customers left reeling after Voyager Digital went bankrupt in 2022. Attracting customers by offering their VGX token as an investment option and earning interest on cryptocurrency deposits was what lured customers to this firm in the first place.
However, Voyager Digital encountered issues when crypto hedge fund Three Arrows Capital defaulted on a loan agreement. Reorganization efforts collapsed quickly, and Voyager filed for bankruptcy shortly thereafter.
1. Voyager Digital Files for Bankruptcy
Voyager Digital initiated its refund process earlier this month for customers affected by its collapse, but this may have revealed an extensive data breach which puts users at risk from scams.
The Unsecured Creditors Committee announced it will send proof-of-claim forms to all Voyager customers soon, along with an anticipated plan that details how they might expect to be compensated with crypto, cash and common shares in a reorganized Voyager Digital. In addition, efforts will be taken to recover funds owed them by defunct crypto hedge fund Three Arrows Capital (3AC).
Voyager holds an outstanding $75 million unsecured loan from Alameda Research, run by Sam Bankman-Fried of crypto exchange FTX and Alameda Research respectively. Bankman-Fried has become known as a lender of last resort to troubled crypto firms; yet bankruptcy filing reveals that Voyager had no other sources of funding when filing Chapter 11. Furthermore, according to bankruptcy documents Voyager found itself short on cash after selling off its mining operation to another crypto firm.
2. Voyager Digital Will Return Some of Your Stuck Crypto
Voyager Digital lured customers in last year with promises of double-digit returns on cryptocurrency investments, and secured endorsement deals with celebrities such as NBA Dallas Mavericks owner Mark Cuban, Tampa Bay Buccaneers tight end Rob Gronkowski and NASCAR driver Landon Cassill – however these sponsorships did not change the fact that users’ funds were unsecure.
Voyager Digital’s demise followed a cryptocurrency price crash, prompting high-risk hedge funds and other crypto sites to withdraw assets en masse, ultimately leading to numerous businesses shutting their doors, including Voyager Digital.
As part of its bankruptcy liquidation deal with FTX US, the company plans to reimburse customers for deposits held with them. They’ll use USDC stablecoin to return funds held in unsupported cryptocurrencies; for deposits that cannot be withdrawn they’ll use their own VGX tokens instead – helping customers recover up to 36% of what’s owed them.
3. Voyager Digital Will Give You More Control Over Your Stuck Crypto
Voyager Digital recently announced that in addition to returning customer funds, it will move a portion of frozen assets into Exodus wallet, which offers customers full control over their cryptocurrency holdings on an easy and user-friendly platform.
Exodus offers hot storage services to Voyager Digital customers, meaning that their crypto is stored in an internet-connected wallet wallet and easily accessed when needed. Customers benefit from this approach in terms of quick fund accessibility.
However, as Voyager Digital’s bankruptcy illustrates, keeping cryptocurrency investments in hot storage can be dangerous. Voyager’s collapse was one of the most dramatic events of a wild 2022 and serves as a sobering reminder that you should never put your money in brokerages that aren’t FDIC insured; otherwise it could have serious repercussions for people investing in cryptocurrency; more may turn away from crypto entirely as more investors lose investments they thought were safe brokerages.
4. Voyager Digital Will Let You Withdraw Your Stuck Crypto
Voyager Digital recently declared bankruptcy and has begun allowing its customers to withdraw funds. Trading, deposits and withdrawals had been suspended abruptly when Three Arrows Capital’s $650 million debt claim was served upon them last year.
Paul Hage, bankruptcy overseer for Voyager’s debt collection service provider 3AC, stated that its platform could reopen from June 20 to July 5 for initial fund distribution to customers – amounting to roughly 35% of their claims. Any remaining money would depend on Voyager’s success at recovering assets from 3AC.
Users can withdraw funds via the Voyager app or Exodus self-custody wallet. To do so, first install the latest version of Voyager, open up its recovery screen, tap on the token you want to transfer, review its Crypto Transfer Disclosure document and check off if necessary, select your network and click Receive before receiving an address for it in your wallet as a receipt.
