The Wall Street Journal reported on Thursday, August 4th, that crypto lender Voyager Digital Holdings Inc. has been granted approval by the U.S. Bankruptcy Court in New York to return $270 million in customer funds.
Judge Michael Wiles, who is overseeing of the Voyager bankruptcy case, ruled that the firm had “sufficient basis” to back up its claim that clients should be given access to the custodial account kept at the Metropolitan Commercial Bank.
The Federal Reserve and the Federal Deposit Insurance Corp (FDIC) issued an order to the company last week, directing it to stop making “false and misleading” statements about the government’s protection of its clients’ funds.
According to regulators, the company only held a bank account at the Metropolitan Commercial Bank, thereby meaning that none of the investors using its platform were covered by FDIC insurance.
Voyager filed for bankruptcy on July 6th, after Three Arrows Capital (3AC) defaulted on a $665M loan. In its bankruptcy filing, Voyager estimated that it had more than 100,000 creditors, totaling between $1 billion and $10 billion in assets, and liabilities to the same value.
Voyager is one of several firms including Celsius, BlockFi, and Vauld to have struggled as a result of the crypto market’s widespread turmoil.
On the Flipside
- CeFi skeptics attribute the current crisis of crypto firms to the core of CeFi: centralization. Trusting centralized providers to be a gateway to decentralized finance poses significant risk that the company may simply fail to pay off, even if there was initially promise of higher yields.
- Despite its liquidity issues, Celsius, another bankrupt cryptocurrency firm, was able to repay a sizable chunk of its debt.
Why You Should Care
- Voyager’s market cap is valuated at $40 million.
- Voyager’s bankruptcy filing came as a shock to many investors, with some claiming to have “millions” of dollars worth of crypto assets, amounting to most of their life savings, trapped on the crypto exchange.
For more recent developments on Voyager, check out: