Voyager cleared to return $270m in customer funds

Cryptocurrency lender Voyager Digital Holdings has been granted an approval by the US Bankruptcy Court in New York to return $270m worth of customer cash.

The court reached a verdict on Thursday and was cited by the Wall Street Journal which reported extensively on the case.

Voyager Digital Holdings filed for bankruptcy after the company first tried to mitigate the financial predicament by pausing withdrawals and asking consumers to deposit more money. When this proved inefficient, Voyager filed the customary bankruptcy proceedings.

Judge Michael Wiles, who is in charge of the case, said that the company has provided “sufficient basis” to support its contention for customers to be allowed to access their custodial accounts.

Voyager is not the only company to seek a safety net of Chapter 11 filing. It was joined by a number of other companies, including the Celsius Network.

Voyager claimed at the time of the filing that it had between $1bn and $10bn in assets as well as liabilities to roughly the same value, without providing any further specify into the numbers.

However, releasing $270m of consumer funds is a good sign and it may ameliorate the company’s embattled position.

Of course, Voyager has been mostly blaming the bearish market in the cryptocurrency industry for its predicament, but observers have noted that the company expanded too rapidly and without providing customers with sufficient safeguards.

The company was also targeted by the Federal Deposit Insurance Corp (FDIC) and asked not to advertise false and misleading claims about customer funds, and specifically not insinuate that the customer’s funds are protected by the government. Currently, the US government offers no federal protection on crypto deposits.

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Source

Updated: 08/05/2022 — 14:00

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