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Bankrupt cryptocurrency lending service Voyager Digital received court authorization on Wednesday to initiate the process of reimbursing its customers’ previously inaccessible funds.
At this point, customers are assured of recovering only 36% of their owed amounts.
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- The court’s approval to start liquidation procedures comes more than 10 months after Voyager halted customer withdrawals in July 2022, shortly following the bankruptcy filing of the now-defunct hedge fund Three Arrows Capital (3AC).
- As reported by Bloomberg, Judge Michael Wiles remarked that “nobody is happy with the liquidation,” alluding to the dissatisfaction among customers regarding the bankruptcy proceedings and outcomes. Common grievances included the expenses associated with the bankruptcy, the fees paid to attorneys, the management of the case, and the limited returns that creditors would receive.
- However, Wiles emphasized that this was their sole alternative since Voyager simply does not possess the resources to fully reimburse customers.
- “Hindsight’s 20/20 – I’m sure everybody wishes that something better had happened,” stated Wiles. “We are where we are, we’re trying to do the best with where we are.”
- Voyager’s difficulties persisted well beyond its bankruptcy filing in July. Its initial strategy to secure a buyout agreement with FTX collapsed when the cryptocurrency exchange failed in November. Subsequently, Voyager creditors issued subpoenas to FTX’s executives for details regarding the buyout proposal, probing whether it was a legitimate offer or merely a publicity maneuver.
- Last month, Voyager’s $1 billion buyout agreement with Binance US also fell apart, with Voyager withdrawing due to a “hostile and uncertain regulatory climate in the United States.”
- The lender currently possesses only $630 million to address $1.8 billion in customer claims, as indicated in a court filing on May 5. Its assets could potentially increase if an ongoing dispute with FTX yields positive results.
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