Voyager Digital, a cryptocurrency brokerage firm that had previously enjoyed remarkable success by meeting the surging demand for digital asset trading, has now embarked on the path of repaying its customers after facing financial turmoil.
The company, known for its robust platform and commitment to superior service, had amassed a wide customer base and secured its position as a prominent player in the industry.
However, unexpected difficulties started to develop as Voyager’s operations grew. The company made strategic moves in the name of growth, but these choices ultimately reversed themselves, leading to serious financial problems.
Voyager’s finances were under a great deal of strain as a result of factors like poor risk management, ineffective internal controls, and questionable investments, which eventually led to the company’s insolvency.
Voyager users to receive about 36% of locked funds
According to a recent report by Bloomberg, Voyager Digital Holdings Inc. has now received court approval to initiate the winding-down process and commence repaying customers a portion of their frozen crypto assets that have been held on the platform since 2022.
United States Bankruptcy Judge Michael Wiles approved the liquidation of Voyager Digital after Binance US terminated its agreement to acquire the cryptocurrency exchange and a previous deal with FTX fell through.
Court documents indicate that customers will receive approximately 36% of the amount owed, with the potential for increased recovery if the firm is able to successfully resolve an ongoing dispute with FTX.
In order to expedite the repayment process, Voyager intends to refund customers using the same cryptocurrencies that they had held in their accounts. However, for deposits involving unsupported cryptocurrencies and Voyager’s proprietary VGX token, customers will receive their repayments in the stablecoin USDC instead.
Not enough funds to fully repay customers
Judge Wiles acknowledged Voyager customers’ complaints about his oversight of the case, the costs associated with the bankruptcy, the legal fees, and the fact that customers will only receive a percentage of their cryptocurrencies back. He explained that the wind-down approach is being pursued because the firm does not have enough funds to fully reimburse its customers.
Furthermore, other options that could have potentially resulted in a better recovery, such as selling the company to FTX or Binance, did not materialize. The judge also noted that Voyager was unaware of the extent of fraud within FTX when attempting to finalize the sale.
Voyager is faced with the challenge of repaying around $1.8 billion in customer claims while having around $630 million at its disposal, as revealed in a court filing on May 5.
As the bankrupt firm embarks on the challenging task of repaying its frozen customers’ funds, it does so with the aim of making the best of the situation it finds itself in. They are exploring all possible avenues to ensure that their customers are compensated in a fair and timely manner.
