Voyager Digital Continues Fund Outflows As Bankrupt Platform Does Good By Clients

Updated: 11 July 2023

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Bankrupt crypto lender Voyager Digital has seen its portfolio shrink over the past few days as clients recoup their funds.

Voyager Sees 39% Shrink in Portfolio

Voyager Digital is taking gradual steps to address the needs of its customers by implementing compensation measures.

Following a year-long suspension of operations, the company initiated a one-month window for customer withdrawals, which commenced on June 23.

Since then, there has been a steady outflow of crypto assets worth $250 million, resulting in a 39.46% decrease in Voyager’s crypto portfolio.

NEWS : Bankrupt Crypto Lender Voyager Digital Shrinks Portfolio by Nearly 40%: Voyager recorded outflows of more than $250 million worth of crypto assets. #Bitcoin #Crypto #Nft https://t.co/JADyLyT1ra pic.twitter.com/iBjG45IPyU

— SYSOP.ai (@sysopai) July 11, 2023

The downfall of Three Arrows Capital (3AC), a failed crypto hedge fund that defaulted on a $665 million loan from Voyager, had a profound impact on the company. Both Voyager and 3AC have been unable to recover from this substantial loss.

Based on data from Dune Analytics, Voyager currently holds approximately $176.38 million worth of crypto assets, including Bitcoin, Ether, USDC, SHIB, MATIC, and other cryptocurrencies.

The firm maintained a Clean Asset ratio of 96.15%, excluding its native token, VGX, alongside a stablecoin balance nearing $19 million.

Voyager’s Downfall

During the COVID-19 pandemic, cryptocurrency lenders like Voyager witnessed significant growth.

They attracted depositors with appealing interest rates and convenient loan accessibility, which are often lacking in traditional banks.

However, the decline in crypto markets following the downfall of two major tokens, Terra Luna and FTT, in May 2022 has had adverse effects on these lenders.

After filing for bankruptcy in July 2022, the lending company faced a series of unfortunate events.

Another one bites the dust Voyager digital files for bankruptcy The dominos are falling Tick Tock hedgies Had the SEC done their job since 2008 would this global collapse take place? SEC DOJ any comments? @DOJCrimDiv @SECGov @FBI @GaryGensler @RepMaxineWaters @POTUS @BBCNews @CNN pic.twitter.com/54X1W7wshV

— Donnahue George (@DonnahueGeorge) July 6, 2022

Its attempt to secure a buyout agreement with FTX ended abruptly when the crypto exchange collapsed in November 2022.

As a result, Voyager’s creditors issued subpoenas to FTX’s executives to investigate the viability of the proposed buyout.

The purpose was to investigate whether the offer was genuinely viable or merely a publicity stunt.

Adding to Voyager’s troubles, its $1 billion buyout deal with Binance US fell through in April 2023. Binance withdrew from the agreement, citing the unfavorable and unpredictable regulatory environment in the United States.

1/ Today we received a letter from https://t.co/yG7Airmib5 terminating the asset purchase agreement. While this development is disappointing, our chapter 11 plan allows for direct distribution of cash and crypto to customers (a “toggle option”) via the Voyager platform.

— Voyager (@investvoyager) April 25, 2023

To mitigate these problems, Voyager’s CEO, Stephen Ehrlich, declared that the company had initiated a voluntary financial restructuring process to safeguard assets on the platform.

Voyagers, today we began a voluntary financial restructuring process to protect assets on the platform, maximize value for all stakeholders, especially customers, and emerge as a stronger company. Voyager will continue operating throughout.https://t.co/TxlO4eua8E

— Stephen Ehrlich (@Ehrls15) July 6, 2022

Their primary objective was to enhance value for all stakeholders, with a special focus on customers, and position themselves as a more resilient organization.

Additionally, Voyager will maintain its operations throughout this process.

In May 2023, United States Bankruptcy Judge Michael Wiles approved Voyager’s liquidation plan.

Failed Crypto Broker Voyager Digital Cleared to Start Repaying Customers’ Frozen Funds.https://t.co/NzNJFuQHPn pic.twitter.com/1fn04nHj8C

— Web3Vibe (@Web3_vibe) May 18, 2023

However, customers expressed dissatisfaction with the bankruptcy process and outcome, raising concerns about costs, lawyer fees, oversight, and the fractional returns they would receive.

Despite the criticism, Judge Wiles acknowledged that the lack of funds prevented Voyager from fully repaying its customers.

Under the approved liquidation plan, Voyager was able to compensate customers with approximately $1.33 billion in cryptocurrency assets, putting an end to its Chapter 11 bankruptcy reorganization attempts.

Chapter 11 procedures typically suspend civil litigation matters, allowing companies to devise turnaround plans while remaining operational.