by Dietrich Knout
NEW YORK (Reuters) – Crypto finance company Voyager Digital said Wednesday that customers will recover about 35% of their cryptocurrency deposits as the company scales back after a failed takeover bid by crypto exchange Binance.US. Announced.
U.S. Bankruptcy Court Judge Michael Wiles approved Voyager’s proposed liquidation plan at a Manhattan court hearing on Wednesday, with the company returning about $1.33 billion of crypto assets to customers and beginning a Chapter 11 recovery. It was approved to terminate the effort.
Voyager filed for bankruptcy protection in July, citing crypto market volatility and a large default on a loan to crypto hedge fund Three Arrows Capital (3AC).
Voyager suffered two unsuccessful sales during bankruptcy. The company initially tried to sell assets to FTX for $1.42 billion, but the deal fell through after FTX filed for bankruptcy in November. Binance.US stepped in with a $1.3 billion offer, but halted trading on April 25, citing a “hostile and uncertain regulatory environment.”
Voyager customers’ recovery hopes are heavily dependent on the outcome of the lawsuit with FTX. FTX is seeking recovery of $445.8 million in loan repayments made to Voyager prior to FTX’s bankruptcy.
According to Voyager’s court filings, if Voyager were to outright win the FTX litigation, customers would have an expected recovery rate of 63.74%.
Voyager intends to reimburse customers in the same type of cryptocurrency that the customer had in their account. For deposits held in unsupported cryptocurrencies that cannot be withdrawn from Voyager’s platform, as well as Voyager’s own VGX token, Voyager will instead use the USDC stablecoin to repay customers.
Voyager was one of several crypto financiers to file for bankruptcy in 2022 following the COVID-19 pandemic boom. Others included Celsius Network, BlockFi, and Genesis Global Capital.
(Reporting by Dietrich Knauth, Editing by John Stonestreet)
