Voyager Digital Bankruptcy

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vVoyager Digital

Voyager Digital was a digital asset investment platform which allowed customers earn an annual return of up to 12% on deposited cryptocurrency assets. Voyager Digital would lend the assets out to various firms, which largely included Three Arrows Capital (over 50% of the portfolio) and Alameda Research (over 30%). With the collapse of the UST/Terra stablecoin, which Three Arrows Capital was heavily invested in, they became unable to repay their debt and had to default. As Voyager Digital's loan to Three Arrows Capital represented such a large portion of their assets, Voyager Digital entered a position of filing Chapter 11 bankruptcy and attempting to restructure the company.

A number of companies stepped forward to acquire Voyager Digital's remaining assets, including FTX US. However, FTX US has subsequently declared bankruptcy and Voyager is back to the table looking for other bidders to acquire the company.

About Voyager Digital

About Page:

The Voyager Finance website promised users fixed returns on cryptocurrency assets.

"Join the financial revolution" "Earn up to 10%* interest APR. 50+ Digital Assets Commission-Free**. Crypto Made Simple" "Earn up to 10% interest APR on stablecoins and 7.25% on Bitcoin. Beat your bank by earning compounding interest each month on 24 top digital assets. No lockups and no limits!"

"We believe that crypto assets are the future of finance and investing. Together, we are creating the broker that the crypto market deserves. We are a team of finance and technology industry veterans dedicated to empowering and servicing investors in the most exciting asset class to date – crypto. Our founders have combined their decades worth of experience from leading organizations like E*TRADE, Uber, TradeIt, Lightspeed Financial and more, to bring you Voyager. Our mission is to provide every investor with a trusted and secure access point to crypto asset trading. We offer best-in-class customer service, incomparable access to the most popular assets and commission-free trading."

"Fund your account and instantly trade all of your favorite coins. Voyager supports Bitcoin, top DeFi coins, stablecoins, and a wide variety of altcoins." "Voyager is commission-free* and navigates the market, so you don’t have to. With Voyager’s Smart Order Router technology, we explore and connect to top exchanges to find you the best price for your trades."

"Voyager is a crypto firm that offers broking services – finding the best prices for cryptocurrencies that customers want to buy or sell – as well as borrowing digital assets from customers in exchange for yields of up to 12%, and then lending them out."

"The Services are offered and available to persons residing in the United States." "With over 2.7 million verified users, Voyager was an extremely popular crypto broker to buy and sell crypto. But, even more than that, you could also earn money on crypto you left with voyager - up to 9 to 10 percent."

"Our straightforward, low-risk approach to asset management is the result of our decades of experience leading companies through market cycles. We have the experience to back our decisions and weather any bear market."

"Honesty and transparency are our top priorities. Voyager is audited to ensure every asset is accounted for in our secure system." "Rest assured knowing our advanced technology is preventing hackers and fraud, always securing your funds." "Our banking partner that holds your USD is FDIC insured, so the cash you hold with Voyager is protected."

"Trading on the Voyager app is currently available to all U.S. residents, excluding New York state. We are actively working with regulators to obtain a BitLicense to operate in New York and internationally later this year. Sign up for our newsletter to find out where we go live next!"

Partnership With Mark Cuban

"Cuban and the Dallas Mavericks announced a five-year partnership with Voyager in October 2021, making Voyager the official cryptocurrency brokerage of the Mavericks. Their signage appeared throughout the American Airlines Center during Mavericks’ home games during the 2021-22 season."

“We understand that there’s a lot of hype, a lot of discussion behind it, but most people don’t understand the fundamentals behind it,” Cuban said about cryptocurrency during the press conference announcing the partnership.

“We’re really going to try and bring that level of education to our fans and to our joint customers. I think we’re going to extend this far deeper than just Mavs fans. I think Voyager is going to be a leader among sports fans and crypto fans around the country.”

Growth Of The Platform

As of February 15th, 2022, "The total verified users on the platform stand at more than 3.2 million, which is up 49 per cent from the last quarter and total assets on the platform are now up to $5.9 billion."

“More importantly, we delivered significant revenue growth and supported a marked increase in customer activity without any material system issues during the quarter, highlighting the steps we’ve taken to build out the scale and security of the Voyager platform in 2021, as we position Voyager for a series of product roll outs in calendar 2022.”

The Reality

Voyager Terms Of Use:

Failure Of Three Arrows Capital

"Before the firm declared bankruptcy, investors who searched for 3AC learned that the firm had an estimated $10 billion in assets under management. After Voyager’s CEO, Stephen Ehrlich, looked at that huge sum, he, like many others, did not believe he would need assets to back loans of over $660 million. Within a few months, 3AC’s AUM shrank to $4 billion. The devaluation in crypto tokens hurt 3AC’s ability to pay its debt."

"Three Arrow Capital’s problems appeared to begin [on June 14th, 2022] after Zhu tweeted a rather cryptic message that the company is “in the process of communicating with relevant parties” and is “fully committed to working this out.”"

"On 16 June 2022, the Financial Times reported that Three Arrows had failed to meet its margin calls. On 22 June, The Wall Street Journal reported that Three Arrows had failed to repay money lent from cryptocurrency broker Voyager Digital. On 27 June 2022, Voyager Digital issued a notice of default against Three Arrows for failing to make the required payments on a Bitcoin and USD Coin loan worth more than $665 million. On the same day, a court in the British Virgin Islands ordered the liquidation of Three Arrows Capital, overseen by Teneo. The Joint Liquidators are Russell Crumpler and Christopher Farmer, both Senior Managing Directors of Teneo. The fund filed for Chapter 15 bankruptcy to protect its US assets from creditors."

"Voyager said it had issued a notice of default to the Singapore-based crypto hedge fund Three Arrows Capital for failing to make required payments on a loan of 15,250 bitcoins (approximately $324m) and $350m worth of USDC, a stablecoin. Later that week, the hedge fund filed for Chapter 15 bankruptcy, which allows foreign debtors to shield US assets from creditors." "The company [had] requested a $25M USDC repayment by June 24, 2022, and payment in full by June 27, 2022." "The announcement did not make any mention of whether Voyager held collateral on its loan to Three Arrows. It declined to comment further."

"According to court liquidation papers, Davies and Zhu have not been cooperating in the liquidation process of Three Arrows Capital, and their whereabouts was unknown as of 8 July 2022. Three Arrows Capital owes 27 creditors a total of $3.5 billion USD. In an interview with Bloomberg held at an "undisclosed location" in July 2022 Zhu and Davies remarked that they plan to move to the United Arab Emirates, a country that does not have extradition agreements with either Singapore or the United States."

What Happened

Voyager paused all trading and withdrawals on its platform on July 1, 2022. Four days later, the company filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York.

Key Event Timeline - Voyager Digital Bankruptcy

Date	Event	Description
March 2018	Voyager Digital Founded	The Voyager Digital Twitter account is first set up.
December 30th, 2021	Hidden Fees Class Action Suit	A class action suite is filed against crypto broker Voyager over hidden trading fees on the platform.
February 15th, 2022 1:15:00 PM MST	Record Breaking Quarter Reported	A record-breaking quarter for Voyager Digital is reported in The Market Herald. The article reports revenues of $164.8m USD, up 4400% compared to $3.5m USD for the same quarter in 2021. The platform has more than 3.2 million verified users and total assets in excess of $5.9b USD. A quote from Steve Ehrlich reads “More importantly, we delivered significant revenue growth and supported a marked increase in customer activity without any material system issues during the quarter, highlighting the steps we’ve taken to build out the scale and security of the Voyager platform in 2021, as we position Voyager for a series of product roll outs in calendar 2022.”.
April 1st, 2022	Cease and Desist Orders Received	Voyager has reportedly received cease and desist orders from four different US states.
June 14th, 2022 7:00:00 PM MDT	Zhusu Tweet	"We are in the process of communicating with relevant parties and fully committed to working this out". TBD need to determine who this is.
June 22nd, 2022 9:00:00 AM MDT	Credit Facility and Potential Default	The Market Herald reports Voyager Digital announcing a credit facility and potential default. TBD expand article coverage.
June 22nd, 2022 9:49:19 AM MDT	Financial Times Article	The Financial Times publishes an article on the Voyager bankruptcy.
June 27th, 2022 7:45:28 AM MDT	CNBC Load Default Report	CNBC reports that Three Arrows Capital has just defaulted on a $670m USD loan.
June 27th, 2022 1:42:55 PM MDT	Decrypt Article on Default	Decrypto publishes an article on the loan default and a formal default notice issued.
June 28th, 2022	Contagion Continues In DeFi Quadrant	"Major crypto lender Three Arrows Capital (3AC) defaults on a $670m loan given by Voyager Digital, cementing rumors of the firm’s insolvency."
July 1st, 2022	Trading and Withdrawals Paused	Voyager Digital pauses all trading and withdrawals on its platform.
July 1st, 2022 8:53:13 PM MDT	Decrypt Article Published	Decrypto published an article on the activity pause on the Voyager Digital platform.
July 4th, 2022	Operations Frozen	"Digital asset brokerage Voyager Digital becomes the latest to have its operations frozen by the current crypto winter as insolvency fears ramp up across the cryptoverse."
July 5th, 2022	Filing For Bankruptcy	Voyager Digital files for Chapter 11 bankruptcy in the Southern District of New York.
July 6th, 2022 4:45:00 AM MDT	The Guardian Article	The Guardian publishes an article on the Voyager Digital bankruptcy. TBD expand article coverage further.
July 7th, 2022 10:29:39 AM MDT	Crowell Crypto Digest	Crowell Crypto Digest publishes a story on the bankruptcy. TBD more details.
July 7th, 2022 12:23:32 PM MDT	The Defiant Article	The Defiant publishes an article on the Voyager Digital bankruptcy.
July 13th, 2022 2:38:38 PM MDT	Coffeezilla Video	YouTube personality Coffeezilla publishes the video "Billion Dollar Bankruptcy Gets WORSE".
July 14th, 2022 1:11:10 PM MDT	Reddit Post About Withdrawals	Reddit user _Deanos asks if they can "still transfer [their] BTC, ETH, and ADA from [their] Voyager account to another wallet?". They express frustration about not being able to transfer their cryptocurrencies from their Voyager account to another wallet. Several users in the thread share similar sentiments, stating that Voyager has halted all trades, withdrawals, and transfers, leaving many users unable to access their funds. Some users express anger and disappointment, believing they have been scammed by Voyager. Others mention the possibility of never getting their crypto back and speculate about the actions of Voyager executives.
July 23rd, 2022 10:42:19 AM MDT	Ignorance And Confusion	Reddit user QAL523 posts a thread titled "So, I’m ignorant and confused! Can someone please explain this to me as if you are explaining to a teen that has never learned about stocks?". The main topic revolves around the Voyager exchange's financial troubles and bankruptcy. Users mention that Voyager gambled with users' crypto assets, leading to financial losses and the company filing for bankruptcy. The discussion also touches on the difference between shares in traditional stocks and cryptocurrency tokens, where users are advised to move their crypto assets to personal wallets (hot or cold wallets) for more security and control. The thread highlights the importance of self-custody, where users hold ownership of their crypto assets by transferring them to wallets they control. Several users express disappointment and anger over the situation, while others discuss the potential outcomes of the restructuring process.
August 3rd, 2022 6:58:57 PM MDT	Conventus Law Analysis Published	Conventus Law publishes a legal analysis of the Voyager Digital bankruptcy case.
August 4th, 2022 7:39:14 PM MDT	Voyager Digital Allowed To Return Funds	CoinTelegraph reports $270m in funds are authorized to be released to customers. TBD expand article coverage further.
August 8th, 2022	Bankruptcy Authorizes Cash Distribution	The US bankruptcy court authorizes Voyager to return $270m in cash to customers of the platform.
August 14th, 2022 7:00:00 AM MDT	Forbes Publishes Lawsuit Against Mark Cuban Article	A Forbes article is published about the lawsuit against Mark Cuban. “Cuban and Ehrlich, went to great lengths to use their experience as investors to dupe millions of Americans into investing—in many cases, their life savings—into the Deceptive Voyager Platform and purchasing Voyager Earn Program Accounts (‘EPAs’), which are unregistered securities,” the lawsuit alleges..
September 2nd, 2022 4:46:31 PM MDT	Reports of Timelines Beginning To Slide	The Virtual Currency Report publishes an article about the bankruptcy timeline beginning to slide. "A host of reasons can cause bankruptcy timelines to slide—ongoing negotiations, buyers dealing with their lenders, holidays, court scheduling issues, perhaps a dearth of interested buyers, and more. These types of changes are usually more of a stew of events than they are attributable to any single ingredient."
September 20th, 2022 3:30:31 AM MDT	Alameda Urged To Repay Loan	Alameda Research is urged to repay $200M loan, as reported by CryptoSlate.
September 20th, 2022 7:02:19 AM MDT	Alameda Set To Repay Loan	Blockworks reports that Alameda is set to repay their $200m loan to Voyager. This is later reported on further by Business Insider.
October 10th, 2022	FTX Set To Acquire Voyager Digital	FTX is reportedly set to acquire Voyager Digital for $0 according to a LinkedIn Pulse article.
October 16th, 2022 1:00:08 AM MDT	CryptoKwam Video Posted	The incident is featured in a CryptoKwam video on YouTube as an argument for holding your own private keys.
October 21st, 2022 12:00:00 PM MDT	FTX US Asset Purchase Agreement Approved	Voyager Digital publishes their approval for an asset purchase agreement by FTX US.
November 17th, 2022 12:56:00 AM MST	Binance Bids To Acquire Bankrupt Voyager Assets	CoinDesk reports on the attempted acquisition.
May 17th, 2023 3:55:00 PM MDT	Reuters Reports Prediction	Crypto lender Voyager Digital has announced that customers will recover approximately 35% of their cryptocurrency deposits as the company prepares to shut down operations after a failed buyout attempt by Binance.US. U.S. Bankruptcy Judge Michael Wiles approved Voyager's liquidation plan, allowing the return of approximately $1.33 billion in crypto assets to customers and ending reorganization efforts under Chapter 11. Customers may be able to make withdrawals by June 1, with any further distribution dependent on future litigation outcomes. Voyager filed for bankruptcy protection in July, citing cryptocurrency market volatility and a default on a large loan to Three Arrows Capital. The recovery percentage could rise to 63.74% if Voyager prevails in litigation with FTX, seeking to reclaim $445.8 million in loan repayments.
May 31st, 2023 5:22:00 PM MDT	Initial Disbursement Plan In Progress	Voyager starts to publish information about an initial disbursement plan, however they are seeking clarification based on certain statements issued by the SEC "You may choose either to take your initial recovery in crypto through the Voyager platform or to wait until the crypto withdrawal period is over to receive your initial recovery in U.S. dollars."

Technical Details

"Voyager paused all trading and withdrawals on its platform on July 1, 2022. Four days later, the company filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York." "Voyager Digital had suspended all withdrawals and trading last week but said “volatility and contagion” in the crypto markets had forced it into a Chapter 11 filing, which shields a business from creditors while it explores strategic alternatives."

“The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company’s subsidiary, Voyager Digital LLC, require us to take deliberate and decisive action now,” Voyager’s chief executive, Stephen Ehrlich, said.

Total Amount Lost

The total amount lost has been estimated at $5,900,000,000 USD.

Immediate Reactions

TBD

Proposed Plan of Reorganization

"Voyager Digital Holdings, Inc. and two affiliates filed for bankruptcy protection on July 5th with a proposed plan of reorganization in hand." "More than 3.5 million American customers have nearly $5 billion in frozen assets on the platform." "In its Chapter 11 bankruptcy filing, Voyager, based in New Jersey, estimated that it had more than 100,000 creditors and somewhere between $1bn and $10bn in assets, and liabilities worth the same value."

"Unlike 3AC’s filing, however, Voyager did so with a plan in hand, filing its proposed plan of reorganization shortly after filing its case. Generally, the plan provides that customers will receive (a) digital assets purchased by, or on behalf of customers and held by the company on the petition date (although it is unclear which or how many coins will be available for distribution), (b) stock in the reorganized Voyager, (c) existing tokens that had been issued by Voyager, and (d) recovery, if any, on account of the 3AC Loan (with the appointment of a litigation agent to pursue recovery). The plan allows some flexibility to exchange stock for coins. According to the plan, 100% of the new stock of a reorganized Voyager, subject to dilution for management, will be distributed to the customers. The company says that it will continue to market the business to third-party investors during the bankruptcy case with the hope of increasing value to its creditors."

"Voyager’s bankruptcy case will raise issues of first impression. For example, the plan does not appear to distinuish between the claims of those customers with digital assets earning “rewards” on the trading platform from those with assets purportedly maintained in custodial accounts. As discussed here, there may be arguments that assets held in custodial accounts are not properly property of the estate. The plan also treats the claims of account holders separately from those of general unsecured creditors who are entitled to a share of the “Claims Allocation Pool,” a term left undefined in the filed plan. The plan also treats customers differently than it does a claim on account of an unsecured loan from Alameda Ventures Ltd. (which is proposed to receive no recovery). As can be expected, the first plan of reorganization in a Chapter 11 of a cryptocurrency platform incorporates standard existing legal frameworks to address creditor recovery and rehabilitation of the estate, such as conversion to equity and use of litigation trusts. It will be interesting to see how these frameworks perform in the digital assets space. Other issues may arise if there continues to be volatility in the value of digital assets (if, for example, BTC is at $20,000 when the plan is solicited but later increases dramatically in value before voting or confirmation)."

Voyager Digital CEO

"Voyager Digital CEO Stephen Ehrlich mentioned in July that he intended to return customer funds from MCB as soon as a “reconciliation and fraud prevention process” was completed, and the firm reportedly asked to have the funds in the MCB released on July 15." "The judge presiding over Voyager’s bankruptcy proceedings in New York cleared the company to return $270 million in customer funds held at the Metropolitan Commercial Bank. Withdrawals were set to begin in August 2022."

Carol Alexander Commentary

"Carol Alexander, professor of finance at the University of Sussex business school, said Voyager’s troubles were part of a crypto credit crisis, but argued that was “not a bad thing at this stage”."

“During the latest bitcoin bubble, firms offering unsustainable yields have proliferated too rapidly.” she said. “The shakedown we are witnessing now is welcomed by most authentic advocates of the digital asset ecosystem.”

Conversations On Reddit

Reddit user _Deanos asks if they can "still transfer [their] BTC, ETH, and ADA from [their] Voyager account to another wallet?". They express frustration about not being able to transfer their cryptocurrencies from their Voyager account to another wallet. Several users in the thread share similar sentiments, stating that Voyager has halted all trades, withdrawals, and transfers, leaving many users unable to access their funds. Some users express anger and disappointment, believing they have been scammed by Voyager. Others mention the possibility of never getting their crypto back and speculate about the actions of Voyager executives.

Reddit user QAL523 posts a thread titled "So, I’m ignorant and confused! Can someone please explain this to me as if you are explaining to a teen that has never learned about stocks?". The main topic revolves around the Voyager exchange's financial troubles and bankruptcy. Users mention that Voyager gambled with users' crypto assets, leading to financial losses and the company filing for bankruptcy. The discussion also touches on the difference between shares in traditional stocks and cryptocurrency tokens, where users are advised to move their crypto assets to personal wallets (hot or cold wallets) for more security and control. The thread highlights the importance of self-custody, where users hold ownership of their crypto assets by transferring them to wallets they control. Several users express disappointment and anger over the situation, while others discuss the potential outcomes of the restructuring process.

Ultimate Outcome

Voyager Digital started a chapter 11 bankruptcy filing before briefly floating the possibility of being acquired by FTX.

Chapter 11 Bankruptcy Proposal

CoffeeZilla posted some criticism of the Chapter 11 bankruptcy proposal.

Voyager is trying to sell people this "chapter 11 bankruptcy-reorg", and hide the fact that under bankruptcy law, a company that describes itself as a "BROKER", cannot do CH11.

They should be required to liquidate under SIPA. (Securities Investor Protection Act).

SIPA liquidation stands a good chance of being BETTER for investors, since under SIPA, investors have protections and would be the first to get paid...but get this...

VOYAGERS LAWYERS ARE TRYING TO STOP THIS. THEY SAY IT WOULD "BENEFIT NO ONE".

Instead, the lawyers of Voyager argue their customers NEVER OWNED THEIR OWN CRYPTO--- despite Voyager's own app LITERALLY SAYING "You own" your crypto.

This is self-serving masquerading as "helping investors"

All of this hinges on whether Voyager was selling people 'securities' or not when they sold crypto. Voyager is arguing they weren't, therefore have no protections offered to regular investors.

Rumpole the Brief agreed with the chapter 11 bankruptcy.

They can describe themselves as squirrels, doesn't make it so. Voyager specifically behaved like a bank, not a broker.

What they ARE matters, not what they claim they are.

Wander over to @AdamLevitin 's thread on it since the judge floated these same thoughts.

Official Committee of Unsecured Creditors

An Official Committee of Unsecured Creditors was appointed, made up of 7 customers.

"The Official Committee is tasked with representing the interests of general unsecured creditors generally and its legal and financial professionals are paid by Voyager’s estate. The Official Committee will weigh in on the sale process and the proposed plan terms with the goal of maximizing recoveries to unsecured creditors. Voyager has also sought approval of the engagement of special counsel on behalf of a special committee of Voyager’s board. The special committee was established to investigate “historical transactions” relating to Voyager and “investigate any potential estate claims and causes of action against insiders” of Voyager, including with respect to the loan to Three Arrows Capital."

Recalling Loans From Alameda Research

"Voyager successfully recalled loans from Alameda Research for 6,500 BTC and 50,000 ETH." "A court filing from [September 19th, 2022] shows Alameda, founded by FTX CEO Sam Bankman-Fried, will pay back 6,553.42 BTC ($125.4 million) and 51,204.38 ETH ($69.1 million) in principal and loan fees, on top of smaller sums in other tokens including dogecoin, USDC, luna classic, and Voyager’s native asset VGX." "The payments are due on Sept. 30 at 5 pm ET. Voyager [returned] the collateral for loans that Alameda had pledged in the amount of 4,650,000 FTX tokens ($110.1 million) and 63,750,000 serum tokens ($49.1 million)."

"The designated wallet addresses for the payoff amounts and the return of collateral were redacted in Alameda’s filing. Making Voyager’s wallet addresses public would affect its restructuring efforts by allowing open access to commercially sensitive financial information, the lender said."

Voyager Plans For Bail Out/Acquisition

"In a Second Day Hearing Presentation on [August 4th, 2022], Voyager stated that it has received word from as many as 88 interested parties keen to bailout the company from its financial woes, adding it is in “active discussions” with over 20 potentially interested parties."

Purchase Agreement With FTX US

"One of the most high-profile bids came from Alameda and FTX in July." "FTX takes the form of an unlikely hero for Voyager users, putting the possibility of funds being returned to customers on the table."

"Alameda had proposed to buy all of Voyager’s assets and outstanding loans except the defaulted loan to Three Arrows Capital, then liquidate the assets and distribute funds in USD through the FTX US exchange."

"This was rejected by Voyager on July 25 on the grounds that it was not “value-maximizing” for its customers." "Voyager also filed a response to an unsolicited bid from AlamedaFTX, the holder of a $75 million claim against Voyager. In the response, Voyager disparaged the offer as “not value maximizing” and not consistent with the proposed bid procedures. They also took the opportunity to state their opinion that AlamedaFTX’s claim is subordinated to customers (rather than pari passu as suggested by AlamedaFTX). In another release, Voyager implied that the Voyager tokens have an aggregate value in excess of $100 million."

"Crypto exchange giant FTX [eventually] won the auction for the assets of bankrupt crypto lender Voyager Digital with a bid worth just over 1.42 billion." "The winning bid includes about $1.31B for the fair market value of Voyager's digital assets and an additional consideration estimated as providing approximately $111M of incremental value." "Voyager says that FTX US's trading platform will enable customers to trade and store cryptocurrency after the conclusion of the company's chapter 11 cases. The deal will be presented to a US bankruptcy court next month and the sale of the assets is still dependent on a vote by creditors."

"As part of a multi-step process, the Court approved Voyager’s entry into the asset purchase agreement between FTX US and Voyager. FTX US’s bid, valued at approximately $1.422 billion, is comprised of (i) the fair market value of all Voyager cryptocurrency at a to-be-determined future date prior to closing of the sale, which at current market prices as of September 26th is estimated to be $1.311 billion, plus (ii) additional consideration which is estimated to provide approximately $111 million of incremental value to creditors. Voyager’s claims against Three Arrows Capital will remain with the bankruptcy estate and any recovery on account of the 3AC claims will be available for additional distribution to Voyager creditors."

"Following approval of its entry into the agreement, Voyager will move forward with a customer vote on the broader Plan, through which the sale to FTX US will be implemented. The deadline to vote on the Plan is November 29. Because we believe the Plan, including the sale to FTX US, maximizes recoveries to Voyager’s creditors, we urge all customers and creditors to vote in favor of the Plan."

On October 12th, 2022, the company reported that an asset purchase agreement had been reached with FTX US. Voyager Digital published a FAQ to their blog.

What did the Court approve?

As part of a multi-step process, the Court approved Voyager’s entry into the asset purchase agreement between FTX US and Voyager. FTX US’s bid, valued at approximately $1.422 billion, is comprised of (i) the fair market value of all Voyager cryptocurrency at a to-be-determined future date prior to closing of the sale, which at current market prices as of September 26th is estimated to be $1.311 billion, plus (ii) additional consideration which is estimated to provide approximately $111 million of incremental value to creditors. Voyager’s claims against Three Arrows Capital will remain with the bankruptcy estate and any recovery on account of the 3AC claims will be available for additional distribution to Voyager creditors.

What are the next steps?

Following approval of its entry into the agreement, Voyager will move forward with a customer vote on the broader Plan, through which the sale to FTX US will be implemented. The deadline to vote on the Plan is November 29. Because we believe the Plan, including the sale to FTX US, maximizes recoveries to Voyager’s creditors, we urge all customers and creditors to vote in favor of the Plan.

How do I vote?

In the coming days, our claims agent Stretto will send solicitation packets to all creditors entitled to vote on the plan, including customers. The solicitation packet includes voting instructions and the approved Disclosure Statement, which provides further details on the Plan. We encourage you to read the entire solicitation packet before submitting your ballot, whether you vote online or by mail.

For your vote to be counted, you must return your ballot to Stretto by the voting deadline of November 29th at 4:00 p.m. prevailing Eastern Time. Only ballots actually received by the November 29th deadline will be accepted.

Why should I vote to ACCEPT the plan?

Voyager and its affiliated debtors believe that the sale to FTX US is in the best interest of all stakeholders and, ultimately, is the best possible—and only actionable--transaction available. As such, Voyager and its affiliated debtors urge you to properly and timely submit your ballot, in advance of the November 29th deadline, with a vote to ACCEPT the plan.

How much value will be returned to me?

Under the plan, the purchase price of Voyager’s cryptocurrency by FTX US, other than for VGX, will be determined based on a 20-day historical average at a future point in time. Because of this, the pro rata value each customer receives will be impacted by the price of Voyager’s cryptocurrency portfolio during the 20-day reference period, which has not yet been set.

Value may be returned to customers through a mix of in-kind crypto, USDC, and U.S. dollars, depending on the nature of a customer’s claims, whether and when customers transition to FTX US, and the specific coins supported on the FTX US platform. Only customers who transition to FTX US will be eligible to receive cryptocurrency as part of their plan distribution—customers who do not transition to FTX US will receive their distributions in cash from the Voyager bankruptcy estates. FTX US currently supports tokens that represent about 77 percent of cryptocurrency denominated claims and is seeking to add additional tokens to raise this percentage.

FTX US does not currently support the VGX token. FTX US has offered to purchase all VGX held by Voyager and its affiliates for a purchase price of $10 million. This is the floor price for VGX. Voyager will continue to work internally and with third parties in an effort to identify a higher and better solution for VGX that is also compatible with the FTX US Asset Purchase Agreement. Any such alternative solution, to be acceptable, must deliver value that exceeds $10 million. If Voyager is unable to identify a higher and better solution for VGX, it will accept FTX US’s offer and this $10 million will be added into the purchase price for all of Voyager’s other cryptocurrency, for distribution to customers. VGX may decline in value and may have no value post-consummation of the plan. VGX constitutes a small fraction of the total value expected to be returned to customers.

To help you understand how much value you may receive through the sale to FTX US, an illustrative distribution spreadsheet is available at: https://cases.stretto.com/Voyager/.

You can input the number and type of coins in your account using that spreadsheet, and it will calculate an estimated distribution as if the Voyager portfolio had been sold on September 29th, 2022, adjusted for the size of the total claims pool against Voyager and associated holdbacks.

The U.S. Bankruptcy Code requires that all creditors of the same class receive “equal treatment” so value will be equitably distributed amongst all customers (i.e., no customer can have a higher opportunity to recover on their claim than another customer).

Further, on the 30-day anniversary of closing, those customers who have transitioned to FTX US will also have an additional $50 deposited into their FTX US account if they have executed one cryptocurrency transaction on the FTX US platform, regardless of the size of the trade. This first trade will not be subject to any transaction fee.

Why was FTX US’s bid selected?

After multiple bidding rounds in a highly competitive auction process that lasted two weeks, with active participation from the Official Committee of Unsecured Creditors (UCC), the FTX US bid was selected as the highest and best bid for our assets. FTX US’s bid, which is significantly better for customers than its original bid, was chosen because it maximizes the value returned to you in the shortest time. Ultimately, the deal reached with FTX US pursuant to the auction contains up to $96 million more for customers than FTX US’s original bid.

Does the UCC support FTX US’s bid?

Yes. The UCC participated actively in the competitive auction and supports FTX US’s winning bid, and agrees the plan must be confirmed to ensure that customers receive distributions in the greatest amount and as quickly as possible.

What happens after the voting period ends?

We anticipate the Bankruptcy Court confirming the Plan as soon as early to mid-December. At that point, Voyager and FTX US will move forward with closing the sale and begin the process to return value to customers through their FTX US accounts, and more information will be provided about steps you need to take to open your FTX US account.

Total Amount Recovered

Investors funds remain locked up on the platform for the time being. It remains to be seen what recovery will be possible through the bankruptcy process.

Crypto lender Voyager Digital has announced that customers will recover approximately 35% of their cryptocurrency deposits as the company prepares to shut down operations after a failed buyout attempt by Binance.US. U.S. Bankruptcy Judge Michael Wiles approved Voyager's liquidation plan, allowing the return of approximately $1.33 billion in crypto assets to customers and ending reorganization efforts under Chapter 11. Customers may be able to make withdrawals by June 1, with any further distribution dependent on future litigation outcomes. Voyager filed for bankruptcy protection in July, citing cryptocurrency market volatility and a default on a large loan to Three Arrows Capital. The recovery percentage could rise to 63.74% if Voyager prevails in litigation with FTX, seeking to reclaim $445.8 million in loan repayments.

Ongoing Developments

The bankruptcy situation remains ongoing.

Backing Out Of FTX

"Nov. 11, 2022 /CNW/ - Voyager Digital Ltd. ("Voyager" or the "Company") (OTC Pink: VYGVQ) (FRA: UCD2) and the Voyager Official Committee of Unsecured Creditors (UCC), which represents the interests of the general unsecured creditors, today announce that the company is evaluating strategic options as a result of the Chapter 11 filing by FTX Group. The no-shop provisions of the Asset Purchase Agreement between Voyager and FTX US are no longer binding."

"For this reason, Voyager has reopened the bidding process for the company, and is in active discussions with alternative bidders. Voyager and the UCC are moving with all due care and deliberate speed to identify an alternative plan of reorganization consistent with the core objective throughout this process: maximizing the value returned to customers and other creditors."

"Following FTX’s announcement [on November 8th] to file for bankruptcy, Voyager said it had reopened the bidding process for the company, and is in active discussions with alternative bidders. Wave Financial and trading platform Cross Tower are reported to be in the running." "At this time, Voyager has no loans outstanding with any borrower."

Acquisition Attempt By Binance

As of April 12th, 2023, the Voyager Digital homepage remains online, however there is a notice that "[c]rypto transactions on [their] mobile and web platforms are currently paused.".

Individual Prevention Policies

When using any third party custodial platform (such as for trading), it is important to verify that the platform has a full backing of all assets, and that assets have been secured in a proper multi-signature wallet held by several trusted and trained individuals. If this can't be validated, then users should avoid using that platform. Unfortunately, most centralized platforms today still do not provide the level of transparency and third party validation which would be necessary to ensure that assets have been kept secure and properly backed. Therefore, the most effective strategy at present remains to learn proper self custody practices and avoid using any third party custodial platforms whenever possible.

Store the majority of funds offline. By offline, it means that the private key and/or seed phrase is exclusively held by you and not connected to any networked device. Examples of offline storage include paper wallets (seed phrase or key written down and deleted from all electronic media), hardware wallets, steel wallet devices, etc...

Any time that you are promised any profit or benefit in exchange for an initial payment, smart contract approval, or deposit, pay special care as to whether the entity making that offer is trustworthy, actually who they say they are, and has the means to fulfill what they're promising. There are no magic algorithms providing guaranteed returns from trading or mining. Trading on average will lose money. Mining is expensive and complex. No one is going to immediately send back more than you sent them. NFT projects will rarely announce a surprise mint in only a single location. Are you fully prepared for the event your money is kept and nothing is delivered in return?

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Do not take customer assets and performing highly risky trades and investments without giving visibility to customers.

All aspects of any platform should undergo a regular validation/inspection by experts. This validation should include a security audit of any smart contracts, reporting any risks to the backing (of any customer assets, ensuring treasuries or minting functions are properly secured under the control of a multi-signature wallet, and finding any inadequacies in the level of training or integrity of the team. The recommended interval is twice prior to launch or significant system upgrade, once after 3 months, and every 6 months thereafter. It is recommended that the third party performing the inspection not be repeated within a 14 month period.

All wallets, minting functions, and critical infrastructure should be implemented with a multi-signature requirement, with a recommended minimum of 3 signatures required. This means that making important changes or approving spending will require the keys held by at least 3 separate individuals within the organization to approve. The multi-signature should be implemented at the lowest layer possible, all key holders should have security training, and all key holders should be empowered and encouraged to exercise diligence.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

All platforms should undergo published security and risk assessments by independent third parties. Two assessments are required at founding or major upgrade, one after 3 months, and one every 6 months thereafter. The third parties must not repeat within the past 14 months. A risk assessment needs to include what assets back customer deposits and the risk of default from any third parties being lent to. The security assessment must include ensuring a proper multi-signature wallet, and that all signatories are properly trained. Assessments must be performed on social media, databases, and DNS security.

Set up a multi-signature wallet with private keys held separately by delegate signatories from seven prominent platforms and services within the industry. Establish requirements for contributions by all platforms and services within the country, designed to be affordable for small platforms yet large enough to cover anticipated breach events. Any breach event can be brought forth by a member platform or a petition of 100 signatures for consideration by the delegate signatories. A vote of 4 or more delegate signatures is required to release any funds, which could partially or fully restore lost funds based on their assessment.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.