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Bankrupt crypto lender Voyager Digital recently announced its projections for customer payouts, estimating a 35% recovery rate for its users.
The company filed for bankruptcy protection last year and has been working diligently to resolve its financial challenges and distribute funds to its customers.
Voyager’s optimistic forecast comes after several legal battles and failed attempts to sell its assets.
The company had initially sought to sell its holdings for $1.42 billion to FTX, but the deal fell through when FTX faced its difficulties.
Another potential acquisition by Binance.US was also abandoned due to concerns over the regulatory climate.
The recovery prospects for Voyager’s customers still depend on the outcome of ongoing litigation with FTX.
In the meantime, FTX demands $445.8 million from Voyager regarding a loan repayment in 2022.
If Voyager succeeds in the litigation, customers can anticipate a 35% payout of their remaining funds.
Voyager plans to reimburse its customers using the same type of cryptocurrency held in their accounts.
However, they may receive their pay in the form of USDC if deposits consist of Voyager’s token, VGX, or unsupported digital assets.
The bankruptcy filing of Voyager and other crypto lenders, such as Celsius Network, BlockFi, and Genesis Global Capital, highlights the challenges faced by companies in the crypto industry during the COVID-19 pandemic.
Notably, the volatile nature of cryptocurrency markets and unforeseen circumstances led to financial strain and the need for bankruptcy protection.
Despite these difficulties, Voyager remains committed to fulfilling its obligations to customers and finding a resolution to its bankruptcy proceedings.
With the projected 35% customer payout, the company aims to provide some relief to its users who have been waiting for the return of their funds.
Other Crypto Companies Face Diverse Challenges In the Space
Several cryptocurrency companies have faced significant financial distress. Some ultimately filed for bankruptcy in 2023, underscoring the challenges plaguing the industry.
The bankrupt ventures yielded to a combination of market volatility, regulatory obstacles, and missteps, leading to their downfall.
Some notable examples among these firms who filed for bankruptcy are Bittrex, Three Arrows Capital (3AC)
On the other hand, Huobi and Coinbase also faced diverse challenges, with the latter currently battling regulatory issues from the US SEC.
Crypto Bittrex
Bittrex Inc., a prominent crypto exchange, filed for bankruptcy protection following a complaint from the U.S. Securities and Exchange Commission (SEC).
The SEC had accused the firm of operating an unregistered securities exchange, leading to the exchange’s decision to seek bankruptcy protection.
Bittrex decided to halt its service to citizens in the United States on April 30 due to the allegations from the SEC.
However, the bankruptcy filing is anticipated to have no impact on Bittrex Global, the company’s international division that serves customers outside the United States.
Three Arrows Capital (3AC)
In 2022, Three Arrows Capital (3AC), a prominent crypto hedge fund, faced a significant setback when it became the first major crypto firm to declare bankruptcy.
In June, the company-initiated bankruptcy proceedings in the British Virgin Islands, according to a Reuters report.
The professionals overseeing the liquidation of 3AC have encountered challenges as the founders of the fund fled overseas and are not cooperating with the efforts to recover assets for the benefit of creditors.
Coinbase
Coinbase recently announced restructuring plans, including substantial staff reductions.
Regardless of its previous dominance in the market, Coinbase struggled to turn a profit amid dwindling investor participation in cryptocurrency trading.
The company’s financial struggles were further compounded by a $50 million penalty imposed by the New York State’s Department of Financial Services for insufficient background checks on customer accounts.
Also, Coinbase received a Wells Notice from the US SEC and has long been in different situations regarding the regulator’s scrutiny.
Huobi
Huobi also took drastic measures in the face of mounting challenges. To mitigate losses and salvage its operations, the company announced a significant reduction in its workforce, letting go of approximately 20% of its staff.
Huobi aimed to maintain a leaner structure and increase operational efficiency by streamlining its team.
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