Bankrupt crypto lender Voyager Digital has recently announced its intention to self-liquidate its assets and cease operations, following deals to sell the company to either FTX or Binance.US falling through. Voyager customers are now expected to recover only 36% of their crypto holdings, significantly lower than the 72-73% estimated recovery rate if the Binance.US acquisition had proceeded.
The recovery rate for customers may potentially increase if the defunct crypto trading firm Alameda Research is unsuccessful in its endeavor to reclaim $446 million from Voyager’s estate. Additionally, Voyager’s lawyers are presently withholding further funds, amounting to $259.6 million, to cover costs related to litigation, administrative claims, and other holdbacks.
Following the announcement, customers with any of the 67 supported tokens, including notable assets such as Bitcoin and Ether, will be able to withdraw the reduced percentage permitted from the platform directly. Nevertheless, a number of digital assets that cannot be withdrawn will undergo liquidation, with the funds returned to customers, affecting considerable cryptocurrencies like Algorand (ALGO), Celo (CELO), and Avalanche (AVAX).
Voyager has also mentioned that former customers can expect some form of reimbursement in the near future, stating on Twitter: “We are hopeful that initial distributions will begin within the next few weeks.” Following the completion of procedures, a 10-day objection period will begin. If objections arise, the matter will advance to a hearing where the court will consider the opposing arguments. If no objections are raised, Voyager intends to move quickly with its plan.
However, the recovery rate for Voyager customers is alarmingly low compared to other unsuccessful crypto platforms. For instance, creditors of bankrupt platform Celsius are estimated to receive 70% of their holdings back.
Voyager’s troubles began last year with its exposure to the bankrupt crypto hedge fund, Three Arrows Capital. Initially, FTX secured the approval of a US bankruptcy court to take over Voyager’s assets, but the venture soon failed. Binance later entered the scenario with a $1 billion valuation of Voyager, but withdrew due to what it called a “hostile” regulatory climate in the United States. This withdrawal came after US regulators such as the Securities and Exchange Commission (SEC) and New York’s financial authority attempted to halt the deal, expressing concerns of potential legal violations and unlicensed operations.