The now defunct and bankrupt Voyager Digital has received court approval to distribute $270 million to creditors and affected customers. The news comes after the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board ordered Voyager to remove statements claiming that Voyager was insured by the FDIC. Judge Michael Wiles, a federal bankruptcy court in New York, allowed Voyager’s custodian, Metropolitan Commercial bank, to release $270 million.
New York Bankruptcy Court Approves $270 Million Release from Voyager’s Custodian
TSX-listed crypto exchange Voyager Digital (OTCMKTS: VYGVF) revealed at the end of June that hedge fund Three Arrows Capital owed the company $655 million. Then, on July 1, 2022, Voyager suspended trading, deposits, and withdrawals to address the turbulent crypto “market conditions.”
A week later, Voyager filed for bankruptcy protection citing “prolonged volatility and contagion in the crypto market.” Voyager’s stock exchanged at $29.86 per share at the peak of the stock in April 2021; today the stock exchanges at $0.34 per unit.
Michael Wiles, a New York native who is currently presiding over the bankruptcy court, has authorized the release of $270 million from Voyager’s custodian, Metropolitan Commercial Bank (MCB), reports the Wall Street Journal (WSJ).
MCB explained to the WSJ that it deposited the $270 million when Voyager filed a voluntary petition for Chapter 11 reorganization; in late July, Sam Bankman-Fried, founder and CEO of crypto exchange FTX, said that FTX is offering Voyager’s customers detailed that they provide early liquidity.
In addition to Voyager, Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy protection and crypto lender Celsius filed for Chapter 11 bankruptcy.Celsius’ customers claimed that the company had approximately 1.7 million customers before its collapseand are therefore very upset about the company’s downturn.
Celsius customers recently pleaded with the bankruptcy judge to release funds held in the platform. One customer stated that it was an “emergency” and that they needed the funds “simply to put a roof over their families’ heads and food on their tables.”
Voyager is estimated to complete bankruptcy proceedings by the end of September 2022, but there is said to be $1.3 billion worth of crypto derived from the 3.5 million customers stored on Voyager’s platform.CNBC reported on August March 3, reported that Voyager CEO Steven Ehrlich sold his shares of Voyager in February and March 2021 for more than $30 million
Voyager, a publicly traded company, adopted an automatic securities disposition plan (ADSP) on December 31, 2021, after Ehrlich sold his shares last year.CNBC’sRohan Goswamireported that on January 20, 2022, Voyager’s CEO mechanism was removed. Voyager Digital also had a contract with the Dallas Mavericks and business relationships with Genesis Global Capital and Galaxy Digital.
What do you think about the judge’s decision in Voyager’s bankruptcy case to allow the company to release $270 million from its custodian, MCB? What do you think about Ehrlich’s decision to cash out Voyager’s shares while the stock price was at its peak? Let us know your thoughts on this matter in the comments section below.
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