Bankrupt Voyager Digital’s $1.33B Crypto Liquidation Plan: Relief for Customers or Added Complications?

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The recent approval of the liquidation plan for the bankrupt Voyager Digital by the U.S. Bankruptcy Court for the Southern District of New York has led to a significant development in the crypto industry. The plan, which was approved by Judge Michael Wiles, allows Voyager to return approximately $1.33 billion in crypto to customers, offering relief to many who have been waiting patiently for their funds.

This decision marks the third bankruptcy plan for Voyager, following Binance.US‘s decision to pull out of a previously reached agreement. With over $1.334 billion in assets, the estate currently holds 75.68% of the aggregate value of customer claims against Voyager. However, customers should only expect an initial payment of 35.72% of their claims due to certain holdbacks. The outcome of future litigations may impact further distribution, depending on several factors such as the FTX/Alameda preference claim dispute and any recovery by the Voyager estate as a creditor in the Three Arrows Capital liquidation.

One peculiar aspect of this liquidation plan is that the initial payments to customers will be made either in crypto through the Voyager app or in cash after a waiting period of 30 days. This decision raises some skepticism as to whether it may create further complications for customers looking to retrieve their funds. Additionally, for deposits held in unsupported cryptocurrencies or Voyager’s proprietary VGX token, customers will be repaid with USDC stablecoin, further showcasing the complexity surrounding this case.

Voyager’s bankruptcy journey has been a turbulent one, as the crypto broker first filed for Chapter 11 in July 2022 after disclosing its massive exposure to the failed crypto hedge fund Three Arrows Capital (3AC). Being in the process of returning assets to investors, Voyager seemed to have found hope with FTX’s interest in buying out the firm’s distressed assets. However, this deal fell through when FTX itself went bankrupt in November, shaking the crypto industry.

In an attempt to solve the ongoing issues, Voyager reached an agreement with the U.S. federal government, allowing it to sell its assets to Binance’s American arm. Yet, this agreement faced a similar fate, as Binance.US walked away from the deal on April 25.

With the recent approval of Voyager’s liquidation plan, it seems that there may be light at the end of the tunnel for affected customers. However, the skepticism that arises from the complexity of this case cannot be ignored, making it vital for the crypto community to stay informed and cautious as the situation unfolds.

Source: Decrypt

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