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Voyager Files Injunction Against Its Former Employees From Ethos

BlockNews Team by BlockNews Team
September 28, 2022
in Business, Crypto, Media, Social
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Voyager Digital Holdings, Inc. has filed an injunction against its former Ethos, Adam Lavine, and Shingo Lavine employees. According to the case file, Voyager, who is the debtor, filed the adversary complaint on Tuesday, September 27, 2022, for a temporary restraining order against the two defendants, together with an injunctive relief to enforce the automatic stay, declaratory relief, and damages and sanctions for violation of the automatic stay.

Voyager’s operations have been using access to the Ethos.io DNS Servers for many years before Voyager decided to shift after the petition date. DNS is a standard internet protocol that enables users, smartphones, and computing devices to access computer servers through a human-readable “domain name.” Communications from Voyager reveal that the expected completion date for the migration to be October 2022.

Voyager’s Bedrock acquisition

Voyager acquired the “Bedrock” business from Ethos.io PTE Ltd in October 2019. The domain name “ethos.io” was not part of the acquired assets during this acquisition. The acquired assets included only what was critical to the business, with some linking to the ethos.io domain name. This included computer servers and subdomains connected to api.ethos.io, mainnet.ethos.io, ceres.ethos.io, and rc2.ethos.io (the “Voyager Subdomains”).

The domain name ethos.io is registered in the name of Ethos.io PTE Ltd. and is believed to be controlled by Lavine and his associates. With the acquisition, the backbone of the Bedrock business (computer and blockchain assets) was stored on and operated from Google cloud computer servers linked to the ethos.io domain name.

According to the filing, the proceeding details threats and actions conducted by Adam and Shingo Lavine (father and son), both of whom are partisan to these bankruptcy cases. This comes as the defendants are involved in the recent 363 auctions of Voyager’s assets and, therefore, have actual knowledge about the scope and meaning of the automatic stay.

In the injunction, Voyager alleges that the Lavine’s have gone out of their way to cause harm and threaten to harm the company’s estates, which to them is a clear violation of the automatic stay.

Cited in the case, Voyager CEO Steve Ehrlich and other company employees received an email from Adam Lavine communicating Ethos’ plans to launch a new service on Friday, October 1, 2022, and the consequent need to edit DNS records on time for propagation purposes.

“We need to terminate Voyager usage of the Ethos.io DNS servers come Wednesday, September 28. This may affect some Voyager services pointing to Amazon servers via the Ethos DNS.”

According to the case file, Adam Lavine notes that Ethos has cooperated with Voyager’s auction process and issued a notice about the DNS issue several years ago. In his opinion, the technical dependency of Voyager on Ethos is unexpected because the technological infrastructure issue ought to have been resolved long ago. Adam also articulated Ethos’s decision not to allow Voyager’s unauthorized access to Ethos DNS, citing an inability to perform essential services.

“We can’t wait any longer, as, without this change, we cannot even do basic services such as CRM and hosted email through ethos.io.”

According to the debtor’s claim, the threat was unexpected given that Voyager has been working in good faith to transition the last remaining technical relationships between Voyager and the Ethos.io domain name held by Adam and Shingo Lavine.

Timing of the threat

The injunction alleges that the Lavine’s never indicated any need for Voyager to complete their work by any specific date. According to Voyager, the termination of their access would have massive effects on their services.

A declaration by Rakesh Gidwani describes the issue as complex, highlighting that the termination of Voyager’s access to DNS servers could eliminate Voyager’s ability to access cloud services, including hosting Voyager’s Bedrock platform and Google data, imposing high costs on the company and the estate, and threatening timely consummation of the sale transaction recently announced.

With this injunction, Voyager claims that the actions by theLavines violate the automatic stay and therefore brings this adversary to request the court to enforce the automatic stay against Adam and Shingo and for injunctive relief. The request also urges the court to grant all appropriate relief requisite for preserving the estate’s value and to give effect to the public policies upon which the Bankruptcy Code is based.

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