Voyager Bankruptcy: A Lesson in Crypto Market Risks and Due Diligence

Eerie cryptocurrency graveyard at dusk, towering wreckage of a failed crypto brokerage, ghostly executives receiving payment, shades of oranges and purples in a Van Gogh style, shadows cast by sharp market fluctuations, tense mood reflects caution and due diligence in crypto trading.

The crypto world has seen its fair share of ups and downs, and the recent bankruptcy of crypto brokerage Voyager is no exception. After two failed attempts to sell its assets to FTX and Binance.US, Voyager has now chosen to liquidate and distribute its assets to creditors. The United States Bankruptcy Court for the Southern District of New York approved the brokerage’s plan on May 17, paving the way for this outcome.

The repeated failures of Voyager’s asset sales have led some to question the management of the company, particularly as lawyers and executives continue to receive payment despite the company’s bankruptcy. This serves as a reminder that, while the crypto industry has massive potential, not all players in the space are guaranteed success, and due diligence is essential when investing in or using these services.

The road to liquidation has been a winding one for Voyager. Initially, FTX US won an auction for Voyager’s assets with a bid of $1.4 billion, but this deal fell through when FTX itself collapsed. The second deal, with Binance.US, fell apart at the last minute after initially overcoming resistance from the U.S. government. This leaves Voyager to liquidate its assets and distribute them among its creditors, who will initially receive 35.72% of their claims.

Customers will receive their share either in crypto through the Voyager app or in cash after 30 days. As of May 8, Voyager held $1.33 billion in assets, with $629.8 million available for initial recovery on claims of $1.8 billion. These figures highlight the significant risk associated with the volatile crypto market and the importance of cautious investment strategies.

However, the size of the creditors’ initial recovery could increase if FTX/Alameda Research’s claim for preferential recovery is unsuccessful. Voyager is currently holding back $445 million to cover this claim. Additionally, Voyager may still recover funds from bankrupt Three Arrows Capital, having issued a notice of default on a loan of 15,250 Bitcoin (BTC) and 350 million USD Coin (USDC) in late June; these assets were worth around $655 million then and approximately $768 million now.

Voyager’s bankruptcy is a complicated situation with many factors at play. On the one hand, it demonstrates the significant risks associated with investments in the crypto market, as well as the importance of understanding and researching the companies and platforms one uses for trading. On the other hand, it serves as a reminder that even in failure, some parties continue to benefit, such as the lawyers and executives who continue to collect payments despite the company’s collapse.

Overall, the Voyager ordeal emphasizes the importance of being cautious and well-informed when it comes to the crypto industry. As the world of blockchain and cryptocurrencies continues to develop, there will undoubtedly be more winners and losers along the way, and investors need to stay vigilant to navigate these uncharted waters.

Source: Cointelegraph

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