Funds held on the platform of bankrupt crypto broker Voyager Digital may begin returning to creditors in the next few weeks, according to a committee of Voyager creditors. The Voyager Official Committee of Unsecured Creditors (UCC) has announced in a tweet that the now-defunct crypto firm is in the final stages of bankruptcy liquidation procedures, and initial distributions could begin soon.
This update comes ten days after Binance.US backed out of its initial agreement to purchase $1.02 billion worth of Voyager’s assets, citing “the hostile and uncertain regulatory climate in the United States” as the reason for abandoning the deal. The UCC expressed disappointment over Binance.US’s action and stated it would be investigating potential claims against the cryptocurrency exchange for its last-minute change of heart.
However, Voyager’s restructuring plan includes a “toggle option” that allows the firm to pursue self-liquidation following Binance.US’s decision to withdraw from the deal. This allows the bankrupt broker to distribute cash and crypto to customers directly via the Voyager platform, rather than relying on a third party to acquire assets and distribute funds.
Voyager now needs to file the liquidation procedures with the U.S. Bankruptcy Court for the Southern District of New York. According to the UCC, parties have ten days to file any objections to these procedures. If no objections are filed within this period, Voyager will legally proceed with the liquidation plan (referred to as “going effective” with the plan). If an objection is filed, however, the court will hold a hearing to consider the objection before the liquidation plan can be implemented.
A total of 97% of the 61,300 Voyager customers who voted on the court’s restructuring plan had voted in favor of it, although at that time, voters believed that Binance.US would acquire the stranded assets. Legal sources suggest that the court is unlikely to receive many objections to Voyager’s proposed liquidation plan. While it remains uncertain precisely how much money customers will recover, they have expressed relief at the prospect of finally receiving some return on their investments.
The outcome of Voyager’s case could serve as a cautionary tale for other cryptocurrency firms, highlighting the importance of regulatory compliance and transparency. The case has also renewed calls for stronger investor protections in the burgeoning cryptocurrency market, with many customers urging regulators to take action to prevent similar situations from occurring in the future.
As the digital asset space continues to evolve, it is crucial for both industry participants and regulators to work together to develop a clear set of rules and guidelines that protect investors while fostering innovation. The Voyager case, while unfortunate for its customers, serves as a timely reminder of the potential risks associated with investments in this sphere and the need for greater regulatory clarity.
In the meantime, Voyager creditors and customers can only hope that the liquidation process proceeds smoothly and that funds will be returned in the next few weeks, as indicated by the UCC’s recent announcement. While it remains to be seen how much money will ultimately be returned, news of the impending distribution has been met with a cautious sense of optimism.
Overall, the Voyager bankruptcy and subsequent liquidation process provide valuable lessons for other businesses operating in the cryptocurrency space, as well as for investors seeking to participate in this high-risk, high-reward market. For industry participants, it highlights the importance of due diligence, robust risk management, and strong regulatory compliance processes. For investors, it serves as a stark reminder that while cryptocurrency investments can offer significant upside potential, they also carry substantial risks – making it critical to proceed with caution and never invest more than one can afford to lose.
