Voyager Digital recently reopened its app to allow customers to withdraw crypto assets; however, the company may have experienced a data breach which compromises customer security.
The Federal Trade Commission filed a lawsuit against Voyager’s founder and CEO over falsely representing consumers’ funds as FDIC-insured, leading them to declare bankruptcy as a means to send important compliance messages about how companies should treat assets belonging to consumers.
FTX’s offer
Voyager Digital was charged by the FTC with making false promises in exchange for consumer deposits between 2018 and its bankruptcy filing in July 2022, promising savings accounts with college tuition payments and down payments on homes; unfortunately, these savings were lost when Voyager Digital collapsed.
After filing for bankruptcy, a bankrupt cryptocurrency lender put an immediate stop to customer withdrawals of funds from customer accounts. But according to new court filings, customers may soon be able to retrieve their crypto holdings from commingled cryptocurrency assets – with an initial recovery payment due in USD as promised by this new court order.
The filing indicates that the firm has achieved “preliminary recoveries” of many of its assets, with plans to continue this effort until all their assets have been recovered, which should take several more months. It also plans on dispersing proceeds from selling 3AC. 3AC has filed bankruptcy protection as it owes significant sums of money to Three Arrows Capital which also filed.
FTX’s settlement
FTX, the failed cryptocurrency exchange that collapsed last year, has reached settlement agreements with celebrity endorsers who helped dupe investors. NFL star Trevor Lawrence, YouTube influencer Kevin Paffrath and musician Tom Nash all accepted settlement offers that cover any claims they helped promote the firm. These deals come ahead of Sam Bankman-Fried’s trial on fraud charges related to the demise of his digital asset empire in Manhattan federal court next month.
Genesis Global Holdco LLC and Alameda Research’s estate of FTX trading company Alameda Research’s settlement agreement will likely enable customers to regain access to billions in assets frozen upon bankruptcy of FTX, and reduce some customer claims subject to clawback by debtors of Alameda Research. The deal also hopes to reduce clawback claims that may have been subject to clawback by creditors of Alameda Research.
Law360 puts you at the center of quickly evolving legal issues, trends and developments so you can act with speed and confidence. Get access to legal news and commentary, AI-powered workflow tools and premium legal & business content – begin your free trial now.
FTX’s town hall
Join leading policy experts from asset management and technology firms as they share their perspectives on some of the most pressing and complex crypto conversations happening right now in Washington, including: the bipartisan market structure bill; ongoing regulatory inquiries; fallout from FTX’s collapse; last spring’s banking crisis; and ongoing lobbying initiatives.
Sam Bankman-Fried’s arrest put an abrupt halt to his testimony before Congress; during today’s hearing, John Jay Ray III, the new chief executive, laid out all the management failures which ultimately caused its collapse.
According to the S.E.C, Mr. Bankman-Fried enticed consumers to deposit money and cryptocurrency at his Voyager trading platform by promising they were safe. He is charged with conducting a yearslong fraud scheme, diverting billions of dollars from his customers for outside ventures or real estate purchases while funneling millions more directly to Democratic candidates; it will ultimately be up to individual campaigns whether or not to return these donations.
FTX’s plan of reorganization
The collapse of FTX, the third-largest crypto exchange worldwide, sent shockwaves through the global cryptocurrency market. It exposed an enormous hole and reignited calls for regulators to expedite implementation of appropriate rules.
Reorganization plan. The reorganization plan seeks to settle an array of claims by classifying them into various pools and setting the groundwork for an offshore operation of FTT Token holders’ assets.
Customers should exercise extreme caution when depositing funds with the firm, using only trusted wallets like Exodus self-custody wallet. They should avoid connecting their wallets to any potentially malicious websites; as FTX has warned, bad actors have already begun targeting its online claims portal and should keep an eye out for any phishing emails or phone calls; though their lawyers are currently working hard on solving these issues.
