The now defunct and bankrupt Voyager Digital has been approved by the court to distribute $270 million in funds to creditors and affected customers. The news follows the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board ordering Voyager to remove any statements that allege Voyager is FDIC insured. The U.S. Bankruptcy Court in New York and Judge Michael Wiles have allowed Voyager’s custodian, Metropolitan Commercial bank, to release the $270 million.
New York Bankruptcy Court Approves Release of $270 Million From Voyager’s Custodian
The TSX-listed crypto exchange Voyager Digital (OTCMKTS: VYGVF) revealed at the end of June that the hedge fund Three Arrows Capital owed the company $655 million. Then on July 1, 2022, Voyager suspended trading, deposits, and withdrawals in order to deal with turbulent crypto “market conditions.”
A week later, Voyager filed for bankruptcy protection after citing “prolonged volatility and contagion in the crypto markets.” Voyager shares exchanged hands at the stock’s peak in April 2021 at $29.86 per share, and today’s shares are swapping for $0.34 per unit.
Now the presiding bankruptcy court judge, Michael Wiles from New York, has allowed $270 million to be released from Voyager’s custodian Metropolitan Commercial bank (MCB), the Wall Street Journal (WSJ) reported.
MCB explained to the WSJ that it held the $270 million when Voyager filed voluntary petitions for reorganization under Chapter 11. At the end of July, founder and CEO of the crypto exchange FTX, Sam Bankman-Fried, detailed that FTX was offering early liquidity to Voyager customers.
In addition to Voyager, Three Arrows Capital (3AC) has filed for Chapter 15 bankruptcy protection, and the crypto lender Celsius filed for Chapter 11 bankruptcy. Celsius customers have been very upset about the firm’s downturn, as the company claimed it had roughly 1.7 million customers before it collapsed.
Celsius customers recently pleaded with the bankruptcy judge to release funds held on the platform. One client said it was an “emergency situation” as he needed his money to “simply to keep a roof over my family and food on their table.”
It is estimated that Voyager will complete the bankruptcy process by the end of September 2022, but there’s allegedly $1.3 billion worth of crypto stemming from 3.5 million customers stored on Voyager’s platform. CNBC reported on August 3, that Voyager’s CEO Steven Ehrlich obtained more than $30 million by selling Voyager equity in February and March 2021.
While Voyager is a publicly traded firm, last year it adopted an automatic securities disposition plan (ADSP) on December 31, 2021, after Ehrlich’s equity sales. CNBC’s Rohan Goswami reports that on January 20, 2022, Voyager’s CEO removed the ADSP structure. Voyager Digital also had a deal with the Dallas Mavericks and business relationships with Genesis Global Capital and Galaxy Digital.
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What do you think about the judge in Voyager’s bankruptcy case allowing $270 million to be released from the company’s custodian MCB? What do you think about Ehrlich cashing out Voyager equity amid the stock’s price peak? Let us know your thoughts about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.
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