- Voyager Digital, a bankrupt crypto lending firm, has received approval from the U.S. Bankruptcy Court for its liquidation plan, which paves the way for the repayment of about $1.33 billion to its clients.
- Initial payments to customers, either in crypto or cash, are anticipated to begin as early as June 1, with customers expected to receive 35.72% of their claims in the first distribution.
- The potential for further distribution is contingent upon the success of future litigations, including the “FTX/Alameda preference claim dispute” and any additional claims brought by the Voyager Plan Administrator against third parties.
In the ever-volatile world of cryptocurrencies, the news of Voyager Digital’s bankruptcy in 2022 reverberated throughout the industry. A year later, the troubled crypto lending firm is finally seeing a glimmer of light at the end of the tunnel. The U.S. Bankruptcy Court for the Southern District of New York has green-lighted the liquidation plan for Voyager Digital, opening the way for the repayment of a staggering $1.33 billion in crypto to their clients.
The Path to Liquidation
Voyager Digital had been at the heart of the crypto lending industry when it filed for Chapter 11 bankruptcy in July 2022. The firm was brought to its knees by a disastrous combination of volatility in the cryptocurrency markets and a default on a significant loan made to the crypto hedge fund Three Arrows Capital (3AC). What followed was a tumultuous period of failed buyout attempts, first by the crypto exchange FTX and later by Binance. U.S. Both deals collapsed, leaving Voyager Digital to face liquidation.
However, the approval of the firm’s liquidation plan has offered a lifeline to Voyager Digital and its creditors. As announced by Voyager’s Official Committee of Unsecured Creditors, initial payments could be made as early as June 1. These payments will be made in crypto through the Voyager app or in cash after a 30-day waiting period.
A Partial Reprieve for Voyager Customers
While the move spells some relief for the creditors of Voyager Digital, it is not all smooth sailing just yet. Although Voyager’s estate has assets amounting to 75.68% of the aggregate value of customer claims against Voyager’s estate, customers should only anticipate an initial payment of 35.72% of their shares.
This is mainly due to “certain holdbacks” and the result of future litigations that are ongoing, particularly those surrounding the “FTX/Alameda preference claim dispute.” However, the possibility of further distribution has yet to be ruled out. It will depend on the success of any additional claims brought by the Voyager Plan Administrator against third parties and any recovery by the Voyager estate as a creditor in the Three Arrows Capital liquidation.
The Final Resort: Liquidation
In case of deposits held in unsupported cryptocurrencies that cannot be withdrawn from Voyager’s platform and Voyager’s proprietary VGX token, the firm has announced that customers will be repaid with the USDC stablecoin. This move is a reassurance to many customers who feared losing their investments entirely.
The saga of Voyager Digital is a stark reminder of the risks inherent in cryptocurrency. But as the curtains close on this chapter, the industry and its customers look to the future, hoping for more stability and fewer bankruptcies. Voyager’s liquidation may be a setback, but it’s a testament to the resilience of the sector and its capacity to weather storms, however fierce they may be.
