Bankrupt crypto company Voyager Digital has achieved a significant milestone in its financial recovery and efforts to compensate its creditors by securing $484 million through settlements with FTX, Three Arrows Capital (3AC), and Directors and Officers (D&O) insurance claims.
According to a filing in the United States Bankruptcy Court for the Southern District of New York on April 9, Voyager revealed that the majority of the recovered funds, approximately $450 million, came from a settlement with FTX. Voyager filed for Chapter 11 bankruptcy in July 2022, following various shocks in 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 parallel lawsuits against former Voyager CEO Stephen Ehrlich for making fraudulent statements. The settlement with FTX, including interest, covers about 25% of the total claims made by Voyager’s creditors and is expected to be distributed soon.
In addition to the FTX settlement, Voyager has secured a claim of around $675 million from its ongoing legal battle with Three Arrows Capital. Out of this amount, Voyager’s share of the initial distribution from 3AC is $20.43 million.
The administrator anticipates further payments to be made in the future as assets are sold and more legal settlements are reached. A settlement achieved through D&O insurance mediation will also provide at least $14.35 million to benefit Voyager’s creditors.
As Voyager continues its journey towards financial recovery, the company faces operational challenges, such as a large number of uncashed checks. There are approximately 270,000 uncashed checks totaling $17 million, with the majority valued at less than $25. If these checks are not claimed by April 20, they will be voided.
Voyager is also dealing with the consequences of a data breach at FTX. An ongoing investigation is underway to determine the origin 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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