Voyager Digital, a recently bankrupt crypto lender, has declared that it will self-liquidate its assets and cease operations, following failed attempts to secure asset sales deals with both FTX US and Binance.US. This development was confirmed in a court filing last week, mere days after Binance US unexpectedly abandoned a $1 billion acquisition bid for Voyager’s assets, influenced by U.S government intervention.
Prior to engaging with Binance US, Voyager Digital had also tried to sell itself to FTX, although the deal was scrapped when FTX followed Voyager into bankruptcy. All of these factors culminated in a low initial recovery rate of 36% for Voyager’s customers, compared to the 72-73% recovery they would have received had either acquisition deal pushed through. Even more troubling, this figure is significantly lower than the recovery estimates for investors of other bankrupt crypto platforms, such as Celsius.
However, there is a small glimmer of hope for the recovery rate to increase if Alameda Research’s attempt to recoup $446 million from Voyager’s estate falls through, as stated in the court filing. In anticipation of the Alameda lawsuit, Voyager’s legal team has reserved an additional $259.6 million for litigation fees, administrative claims, and various other “holdbacks.”
Regarding the process of returning funds to investors, creditors with any of the 67 “supported” tokens, including BTC and ETH, will be able to directly withdraw their crypto up to the permissible limit. Unfortunately, for those holding any of the 38 “unsupported tokens” like SOL and ALGO, Voyager will liquidate their assets and reimburse them in USDC, a stablecoin.
With a deadline of May 15 for submitting objections to the liquidation process, impacted creditors have limited time to voice their concerns to the U.S. Bankruptcy Court of the Southern District of New York.
As the crypto industry continues to expand, instances like Voyager Digital’s bankruptcy raise questions about the stability and protection of investments, especially when it comes to emerging platforms. Stringent regulations may be necessary to ensure that businesses operate in accordance with legal guidelines and maintain investor trust. Despite this, the industry has demonstrated a strong track record of resilience and innovation, and enthusiasts remain hopeful about the future of blockchain technology, crypto markets, and overall security.