Crypto lender Voyager Digital has announced that customers will recover approximately 35% of their cryptocurrency deposits as the company winds down operations after an unsuccessful buyout attempt by Binance, US.
U.S. Bankruptcy Judge Michael Wiles has approved Voyager’s liquidation plan. It enables the return of around $1.33 billion in crypto assets to customers and ending the Chapter 11 reorganization efforts.
Customers may be able to withdraw funds starting from June 1. This is with respect to any additional distribution beyond the initial 35% contingent on future litigation outcomes.
Bankruptcy protection and recovery prospects for Voyager Digital
Voyager filed for bankruptcy protection in July. It cited cryptocurrency market volatility and a default on a significant loan made to crypto hedge fund Three Arrows Capital (3AC). The company’s subsequent sale attempts were unsuccessful.
Initially, Voyager sought to sell its assets for $1.42 billion to FTX. However, the deal fell through when FTX encountered issues. Binance, U.S then stepped in with a $1.3 billion offer. Nevertheless, it cancelled the deal on April 25, citing regulatory uncertainties.
The recovery prospects for Voyager customers depend largely on the resolution of litigation with FTX. It aims to reclaim $445.8 million in loan repayments made by Voyager prior to FTX’s bankruptcy.
If Voyager prevails in the FTX litigation, the expected customer recovery would rise to 63.74%, according to court filings.
Customer repayment prospects
Voyager plans to reimburse customers with the same type of cryptocurrency held in their accounts.
However, for deposits consisting of unsupported cryptocurrencies that cannot be withdrawn from the Voyager platform, as well as Voyager’s proprietary VGX token, customers will be repaid using the stablecoin USDC.
The bankruptcy filings of Voyager and other crypto lenders, including Celsius Network, BlockFi, and Genesis Global Capital, have occurred amidst the boom and subsequent challenges faced by the industry during the COVID-19 pandemic.
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