Voyager Digital, after experiencing a devastating bear market, has filed for bankruptcy protection. Owing more than $650 million to 3AC creditors and possessing over $1.3 billion worth of assets that customers are not permitted to withdraw, Voyager Digital’s crypto broker filed its application earlier today for Chapter 11.
Creditors of TSX-listed lender Voyager Crypto Ltd are searching for answers after it suspended withdrawals and filed for bankruptcy protection, so any updates from Voyager could signal major shifts and surprises ahead.
Recovering Assets
Voyager Digital anticipates returning approximately 35% of its customers’ cryptocurrency deposits; the exact percentage will depend on both how much was deposited and when withdrawal occurred. To claim back their funds, those seeking recovery must open an account with Gemini and transfer their funds within a specified time frame.
Customers will receive their refund in the same cryptocurrency they originally held to ensure fairness and make recovery more straightforward. Customers depositing unsupported cryptocurrencies or Voyager’s own VGX token will instead be reimbursed with USDC as the stablecoin option.
The 2022 crypto market turmoil left many investors uncertain of their investments’ fate. Voyager’s bankruptcy highlighted the risks involved with investing in volatile digital assets like bitcoin. To protect their investments and maximize returns, investors should keep abreast of new developments within the crypto industry and evolving regulations, staying abreast of partnerships or regulatory changes which might impact their returns – such as potential partnerships or changes that impact investment strategies directly.
Repaying Creditors
Last month, Voyager Digital allowed customers to claim funds left with it after its collapse last year, however there appears to have been an issue during this process and that personal information may have been stolen from some customers.
Tweeting its announcement, a failed cryptocurrency lender stated they are now “in the process of finalizing liquidation procedures.” They noted they expect to begin paying creditors some form of reimbursement within weeks.
Plans call for providing customers with some combination of proceeds from 3AC recovery, common shares in a reorganized firm and Voyager tokens; whether this effort will succeed remains to be seen, given that many creditors are opposed to its current proposal and worry that Voyager assets might take longer to sell, making it harder for Voyager to return customers’ funds to them.
Liquidation Procedures
Voyager Digital filed for liquidation following its unsuccessful buyout by Binance and plans to return value to customers, although this process may take time. At present, Voyager is evaluating what amount can be recovered from customer funds that were stored in shared wallets.
The firm is also exploring plans to sell or swap debt for equity, two options commonly employed during bankruptcy proceedings which can help companies regain financial footing.
Though these efforts were made, many Voyager customers remain disgruntled. Many have been waiting months to see if they will receive their money back; additionally they have complained of potential data breach issues and other concerns. This setback for the cryptocurrency industry, already struggling to recover from FTX collapse. Hopefully the new plan can resolve these issues or the sector may face another long winter period.
Exiting Bankruptcy
Voyager plans to recommence withdrawals and refund customers following its exit from bankruptcy, using its established repayment plan which will give account holders a pro-rata share of four assets: cryptos, proceeds from 3AC recovery, common shares in the reorganized company, and existing VGX tokens.
Metropolitan Commercial Bank announced that initial distributions of cash and cryptocurrency will take place over the coming weeks, while those with USD deposits can gain access to their funds when Metro Commercial Bank completes its reconciliation and fraud prevention processes.
Voyager’s plan may be an improvement on what came before it; however, it may still fall short in satisfying all customers. Voyager still owes $650 million to failed crypto hedge fund Three Arrows Capital and could still be forced to liquidate some assets before returning any of them back to users – leaving many users with significantly less than was initially owed them.
