Bankrupt cryptocurrency firm Voyager Digital has taken a significant step towards compensating its creditors by securing a total of $484 million through settlements with FTX, Three Arrows Capital (3AC), and Directors and Officers (D&O) insurance claims. This achievement represents a major milestone in Voyager’s financial recovery and efforts to reimburse its creditors.
According to a filing made on April 9 in the United States Bankruptcy Court for the Southern District of New York, Voyager revealed that the majority of the reclaimed funds, approximately $450 million, came from a settlement with FTX. Voyager had filed for Chapter 11 bankruptcy in July 2022 following various shocks to the crypto market, including the collapse of the Terra ecosystem in May.
In October 2023, the U.S. Commodity Futures Trading Commission and the Federal Trade Commission (FTC) filed separate lawsuits against former Voyager CEO Stephen Ehrlich for making fraudulent statements. The settlement with FTX, including interest, accounts for about 25% of the total claims made by Voyager’s creditors and is expected to be disbursed soon.
Apart from the agreement with FTX, Voyager has also obtained a claim of approximately $675 million from its ongoing litigation with Three Arrows Capital. Out of this amount, $20.43 million represents Voyager’s share of the initial distribution from 3AC.
The administrator of Voyager anticipates further payments to be made in the coming years as assets are sold off and additional litigation settlements are secured. A settlement reached through D&O insurance mediation will also allocate at least $14.35 million for the benefit of Voyager’s creditors.
As part of its financial recovery journey, Voyager is facing operational challenges, including a large number of uncashed checks. There are around 270,000 uncashed checks totaling $17 million, with the majority being valued at less than $25. Voyager has set a deadline of April 20, after which these uncashed checks will become void if not claimed.
Voyager is also grappling with the consequences of a data breach at FTX. An investigation is currently underway to determine the source and impact of the breach, which led to the compromise of creditor data.
As of May 2023, a restructuring plan proposed that Voyager customers would recover 35.7% of their claims in cryptocurrency or cash. In November 2023, the crypto exchange reached a settlement with the FTC for $1.65 billion in monetary relief.
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