Voyager Crypto News: Voyager Digital, a crypto lender, recently revealed that customers will receive approximately 35% of their deposits following its closure following a failed acquisition attempt by Binance. U.S. Bankruptcy Judge Michael Wiles approved Voyager’s liquidation plan which allows it to distribute about $1.33 billion worth of crypto assets back to customers as the Chapter 11 reorganization efforts come to an end. Customers may begin withdrawing deposits beginning June 1.
Future distributions beyond the initial 35% distribution may depend upon future litigation outcomes.
Voyager Crypto News
Voyager filed for bankruptcy protection in July due to cryptocurrency market volatility and default on loans provided to Three Arrows Capital (3AC), a crypto hedge fund. During its bankruptcy proceedings, Voyager attempted two unsuccessful sales; initially with FTX for $1.42 billion before that deal fell apart due to financial challenges at both companies.
Later Binance.US provided an offer worth $1.3 billion but withdrew it due to regulatory uncertainties on April 25 – ultimately leaving customers’ recovery at the mercy of ongoing litigation with FTX seeking to reclaim $445.8 million loan repayments made prior to FTX filing bankruptcy protections against Voyager customers.
Voyager prior to Voyager filing bankruptcy protection proceedings; customers could see recovery depending on the resolution of ongoing litigation between them and FTX which seeks reclaim of $445.8 million loan repayments made prior to bankruptcy proceedings being initiated against Voyager but not enough attention is being given towards its resolution by this time around!
Voyager plans to reimburse its customers using the cryptocurrency they held in their accounts; for deposits made with unsupported cryptocurrencies or its own VGX token, however, USDC will be used instead as the stablecoin payment mechanism. Voyager followed other crypto lenders such as Celsius Network, BlockFi, and Genesis Global Capital by filing bankruptcy due to COVID-19 pandemic concerns in 2022.
The bankruptcy of Voyager Digital reflects a broader trend among crypto lenders that faced challenges in the wake of the COVID-19 pandemic. The volatile nature of cryptocurrency markets, coupled with the uncertainties brought about by the global health crisis, resulted in financial difficulties for many companies operating in the crypto lending space.
Voyager’s case highlights the risks associated with the industry’s rapid growth and the need for regulatory clarity. The failed buyout attempts by both FTX and Binance.US underscore the challenges faced by crypto companies in navigating the evolving regulatory landscape. The decision by Binance.US to withdraw its offer specifically points to concerns over regulatory uncertainties and their potential impact on business operations.
The outcome of the litigation with FTX will be crucial for Voyager and its customers. If Voyager successfully defends itself against FTX’s claims, customers’ expected recovery could increase significantly to 63.74%. However, the resolution of such litigation processes can be time-consuming and unpredictable, adding further uncertainty to the situation.
In an effort to facilitate the repayment process, Voyager has stated its intention to reimburse customers using the stablecoin USDC for unsupported cryptocurrencies and its own VGX token. This approach aims to ensure that customers receive value equivalent to their original deposits, even if the specific assets held cannot be directly withdrawn from Voyager’s platform.
As the crypto lending industry continues to evolve, it will be essential for companies to adapt their business models to mitigate risks and ensure the security of customer assets. Regulatory compliance, risk management, and transparency will play vital roles in establishing the credibility and long-term viability of crypto lending platforms.
Overall, the bankruptcy of Voyager Digital and its subsequent payout to customers reflect the challenges and uncertainties faced by companies operating in the crypto lending sector. It serves as a reminder for investors and users of cryptocurrencies to exercise caution and conduct thorough due diligence when engaging with such platforms, considering the inherent risks associated with the industry.
