Voyager Digital Customers Left High and Dry With Only 35% Crypto Deposit Recovery

according to a reuter reportsCryptocurrency lender Voyager Digital’s efforts to reorganize under Chapter 11 have come to an end, with a US bankruptcy judge approving their proposed liquidation plan.

The company filed for bankruptcy protection last July due to volatility in cryptocurrency markets and a default on a large loan made to crypto hedge fund Three Arrows Capital, which would have returned $1.33 billion in crypto assets to customers. However, customers will only be able to recover around 35% of their cryptocurrency deposits as the company shuts down its operations following a failed buyout attempt by crypto exchange Binance.US.

Only a fraction of the deposit remains with Voyager

Voyager’s bankruptcy case was complicated by two failed sales attempts during the bankruptcy process. The company had initially sought to sell its assets to FTX for $1.42 billion, a deal that fell through after FTX broke down in November. Binance.US signed a $1.3 billion offer, but called off the deal on April 25, citing a “hostile and uncertain regulatory environment”.

According to the report, Voyager’s customers’ hopes of recovery now depend heavily on the outcome of litigation with FTX, which is seeking to return $445 million in loan repayments made to Voyager prior to FTX’s bankruptcy.

However, if Voyager FTX fully prevails in the litigation, the expected recovery for clients would be 63.74%, according to Voyager’s court filing.

Voyager intends to pay customers with the same type of cryptocurrency they had in their accounts. However, for deposits held in unsupported cryptocurrencies that cannot be withdrawn from Voyager’s platform and Voyager’s proprietary VGX token, Voyager will repay customers using Circle’s stablecoin USDC.

Voyager was one of several crypto lenders to file for bankruptcy in 2022 following a boom in the COVID-19 pandemic. Other companies that filed for bankruptcy include Celsius Network, BlockFi, and Genesis Global Capital.

Did the SEC Play a Role in the Failed Acquisition of Binance.US?

There is speculation that the Securities and Exchange Commission (SEC) may have a hand in Binance. Crypto lender failed in its $1.3 billion acquisition of Voyager Digital. The buyout was called off in April with Binance.US citing a “hostile and uncertain regulatory environment”. However, some industry experts believe that the SEC’s increased scrutiny of the crypto industry may have played a role in the failed acquisition.

The Securities and Exchange Commission is ramping up its efforts to regulate the cryptocurrency industry. As a result, companies like Coinbase are looking for ways to expand their operations to other jurisdictions.

France, in particular, has been welcoming of these firms due to regulatory uncertainty in the United States. Market experts and even senators have criticized this approach from the regulatory agency, who argue that a clear rulebook is needed to foster innovation and diversify investment opportunities for US customers of crypto firms. Needed. A clear regulatory framework will not only benefit the industry but the country as a whole.

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