U.S. Bankruptcy Judge Michael Wiles has approved the bankrupt crypto lender Voyager Digital's self-liquidation plan at a court hearing in Manhattan.
The decision authorized the firm to repay $1.33B in crypto assets to customers through its own platform, allowing creditors to recover about 35% of their crypto deposits.
- Voyager customers are expected to be able to withdraw their funds by June 1.
- The creditors will be repaid with the same type of cryptocurrencies as their account balances.
- Voyager will refund the balances in its native token, VGX, using USD Coin (USDC) stablecoin.
- Further repayments beyond the initial 35% portion of the deposits will depend on the aftermath of the other ongoing legal proceedings, especially with the bankrupt crypto exchange FTX.
- The recovery rate will increase to 63.74% if Voyager fully prevails in the FTX litigation.
- The court's decision came nearly one month after Binance.US, the U.S. arm of the largest crypto exchange by trading volume, terminated its $1.3B acquisition deal with Voyager, citing the hostile and uncertain regulatory climate in the U.S.
- Binance.US' deal faced opposition from many regulators in the U.S., including the Department of Justice (DOJ), the New York State Department of Financial Services (NYDFS), the Texas State Securities Board, the Securities and Exchange Commission (SEC), and the Federal Trade Commission (FTC).
- The objections were mainly based on concerns about a potential relationship of Binance.US with Binance.com and the transaction's potential to include the sale of unregistered securities, including VGX.
- Voyager Digital filed for Chapter 11 bankruptcy in July 2022, nearly four years after its launch, citing volatility in the crypto market and its exposure to the bankrupt crypto hedge fund Three Arrows Capital (3AC).
- With the move, the firm joined other crypto-related companies, including Celsius Network, BlockFi, and Genesis Global Capital, going bankrupt after a prolonged crypto winter.
- Before the deal with Binance.US, Voyager sold its assets to FTX's U.S. arm, FTX US, in September 2022 with a $1.42B agreement, which then failed with FTX's bankruptcy.
- The sales deal with Binance was expected to compensate 50%-73% of Voyager creditors' holdings and result in a $100M larger gain for customers than a possible liquidation.