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Bankrupt crypto lending platform Voyager Digital has received court approval to begin repaying its customers’ long-trapped money. However, the customers are only guaranteed to receive 36% of what they’re owed.
The approval comes 10 months after Voyager froze customer withdrawals in July 2022, following the bankruptcy of defunct hedge fund Three Arrows Capital (3AC).
Judge Michael Wiles noted that nobody is happy with the liquidation with common criticisms including the cost of the bankruptcy and the amount being paid to lawyers, the oversight of the case, and the fractional returns that creditors would receive. Nevertheless, he stated that this was their only option because Voyager is lacking the funds to repay customers in full. Wiles said, “Hindsight’s 20/20 – ’m sure everybody wishes that something better had happened. We are where we are, we’re trying to do the best with where we are”.
Voyager’s misfortunes continued even after filing for bankruptcy in July. Its initial plan to strike a buyout deal with FTX imploded in November when the crypto exchange fell through. Voyager creditors later subpoenaed FTX’s executives for information about its plan to buyout the company, investigating whether it was a reasonable offer or just a publicity stunt.
Recently, Voyager’s $1 billion buyout deal with Binance US also fell through, with the former pulling out citing a “hostile and uncertain regulatory climate in the United States.”
Currently, Voyager has only $630 million to repay $1.8 billion in customer claims as per a court filing on May 5. Its holdings may increase if a pending dispute with FTX proves fruitful.
