Voyager bankruptcy – what account holders need to know

By:
on Jul 6, 2022
  • Voyager Digital customers will not get their deposits but a mix that includes company stock and tokens.
  • The crypto lender has filed for Chapter 11 bankruptcy.
  • Account holders are expected to be "impared"

Voyager Digital Ltd., filed for Chapter 11 bankruptcy on Tuesday, effectively bringing to the fore one question – what next for its account holders?

Not to go into the details of it, here is the simple truth – customers might not receive all the crypto they deposited. 

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Here is what Voyager has said about its account holders: they fall into a class of claims that is entitled to vote on whether to accept or reject settlement proposals arrived at as part of the Chapter 11 process.

‘Impaired’ group

The company says the account holders’ group is “impared”, which means users are unlikely to receive whatever deposits they had with the crypto lender. Note that with Voyager, it’s “not your keys, not your crypto.” All crypto deposits go into the company’s wallets and from where they are loaned out.

So accepting the claim allocation as envisioned in the bankruptcy plan would see users receive, not the Bitcoin, or other digital assets they deposited, but a combination of a bit of everything available.

The bankruptcy filing provides for a “pro rata share” of the account holder’s deposited crypto (still held by the company), an allocation of the Voyager stock after reorganization, the company’s native tokens and funds recovered from collapsed crypto hedge fund Three Arrows Capital (3AC).

Voyager CEO Stephen Ehrlich said in a statement:

It’s important to note that as part of this announcement we are confirming that customers with USD deposits in their account(s) will receive access to those funds after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank.

Voyager has said it holds roughly $1.3 billion worth of various crypto assets. It also had loan claims of more than $650 million against 3AC, while its account at the Metropolitan Commercial Bank had over $350 million cash.

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