Bankrupt Crypto Firm Voyager Digital Approved To Release $270 Million In Cash Deposits

Voyager Digital, now defunct and bankrupt, was authorized by the court to distribute $270 million in funds to affected creditors and customers. The news follows the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board ordering Voyager to remove any statements alleging that Voyager is FDIC insured. The US Bankruptcy Court in New York and Judge Michael Wiles allowed Voyager’s custodian, the Metropolitan Commercial Bank, to release the $270 million.

New York bankruptcy court approves $270 million release from Voyager custodian

Toronto Stock Exchange-listed crypto exchange Voyager Digital (OTCMKTS:VYGVF) revealed in late June that hedge fund Three Arrows Capital owed the company $655 million. Then, on July 1, 2022, Voyager suspended transactions, deposits, and withdrawals in order to deal with turbulent crypto “market conditions.”

A week later, Voyager filed for bankruptcy protection after citing “prolonged volatility and contagion in crypto markets.” Shares of Voyager traded hands atop the stock in April 2021 at $29.86 per share, and shares today are trading at $0.34 per unit.

Now, Presiding Bankruptcy Court Judge Michael Wiles of New York has authorized the release of $270 million from Voyager’s custodian Metropolitan Commercial Bank (MCB), the Wall Street Journal (WSJ) reported.

MCB told the WSJ that it had the $270 million when Voyager filed voluntary Chapter 11 reorganization petitions. In late July, crypto exchange FTX founder and CEO Sam Bankman-Fried clarified that FTX offered early liquidity to Traveler Clients.

In addition to Voyager, Three Arrows Capital (3AC) has filed for Chapter 15 bankruptcy, and crypto lender Celsius has filed for Chapter 11 bankruptcy. been very upset with the downturn in business, as the company claimed it had around 1.7 million customers before it collapsed.

Celsius customers recently petitioned the bankruptcy judge to release funds held on the platform. One customer said it was an ’emergency’ as he needed his money to ‘just keep a roof over my family and food on their table’.

Voyager is estimated to complete the bankruptcy process by the end of September 2022, but there is reportedly $1.3 billion worth of crypto from 3.5 million customers stored on Voyager’s platform. CNBC reported on August 3 that Voyager CEO Steven Ehrlich raised more than $30 million by selling shares of Voyager in February and March 2021.

Although Voyager is a publicly traded company, last year it adopted an automatic securities disposal plan (ADSP) on December 31, 2021, after Ehrlich’s stock sales. CNBC’s Rohan Goswami reports that on January 20, 2022, Voyager’s CEO removed the ADSP structure. Voyager Digital also had a deal with the Dallas Mavericks and business relationships with Genesis Global Capital and Galaxy Digital.

Keywords in this story

$270 Million, ADSP, Bankruptcy Court, Bankruptcy Proceedings, Cash Deposits, Celsius, Celsius Clients, Chapter 11 Bankruptcy, Court, Dallas Mavericks, Galaxy Digital, Genesis Global Capital, Judge Michael Wiles, Judge Micheal Wiles, MCB, Metropolitan Commercial Bank, Micheal Wiles, new york, stock, Steven Ehrlich, Voyager Digital, Voyager stock, Voyager stock

What do you think of the judge in Voyager’s bankruptcy case allowing the release of $270 million from the company’s MCB custodian? What do you think of Ehrlich cashing in on Voyager shares amid the stock price spike? Let us know your thoughts on this in the comments section below.

Jamie Redman

Jamie Redman is the News Manager at Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,700 articles for Bitcoin.com News about disruptive protocols emerging today.




Image credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: mundissima / Shutterstock.com

Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Leave a Comment

Your email address will not be published.