Bankrupt cryptocurrency firm Voyager Digital has taken a significant step towards compensating its creditors by securing $484 million through settlements with FTX, Three Arrows Capital (3AC), and Directors and Officers (D&O) insurance claims. This achievement signifies a major milestone in the company’s financial recovery and efforts to reimburse its creditors.
In a filing submitted on April 9 to the United States Bankruptcy Court for the Southern District of New York, Voyager disclosed that the majority of the reclaimed funds, approximately $450 million, were obtained through a settlement with FTX. Voyager filed for Chapter 11 bankruptcy in July 2022, amidst 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, accounts for approximately 25% of the total claims made by Voyager’s creditors and is expected to be distributed soon.
In addition to the FTX agreement, Voyager has obtained a claim of around $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 anticipates further payments to be disbursed in the coming years as assets are sold and more litigation settlements are secured. Additionally, a settlement reached through D&O insurance mediation will allocate at least $14.35 million to benefit Voyager’s creditors.
As Voyager continues its journey towards financial recovery, the company faces operational challenges, including a significant number of uncashed checks. There are approximately 270,000 uncashed checks totaling $17 million, with the majority valued at less than $25. Voyager has set a deadline of April 20, after which these uncashed checks will become void if not claimed.
Furthermore, Voyager is still addressing the consequences of a data breach at FTX. An investigation is underway to identify 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 settled with the FTC for $1.65 billion in monetary relief.
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