Bankrupt firm Voyager Digital has taken a significant step towards compensating its creditors by securing a total of $484 million through settlements with FTX, Three Arrows Capital (3AC), and Directors and Officers (D&O) insurance claims. This development marks a major milestone in the company’s financial recovery efforts and its commitment to reimbursing its creditors.
In a filing made on April 9 in the United States Bankruptcy Court for the Southern District of New York, Voyager revealed that the majority of the recovered funds, approximately $450 million, came from a settlement with FTX. It is crucial to note that Voyager filed for Chapter 11 bankruptcy in July 2022, following multiple shocks in the crypto market, including the collapse of the Terra ecosystem in May.
Further complications arose when the U.S. Commodity Futures Trading Commission and the Federal Trade Commission (FTC) filed parallel lawsuits against former Voyager CEO Stephen Ehrlich for making fraudulent statements. However, the recent settlement, including interest, which accounts for around 25% of Voyager creditors’ total claims, is expected to be distributed in the near future.
In addition to the agreement with FTX, Voyager has secured a claim of approximately $675 million through its ongoing litigation with Three Arrows Capital. Out of this amount, $20.43 million represents Voyager’s share of the initial distribution from 3AC.
The administrator foresees additional payments being disbursed in the coming years as assets are sold off and further litigation settlements are finalized. Additionally, a settlement reached through D&O insurance mediation will allocate at least $14.35 million to benefit Voyager’s creditors.
As Voyager progresses on its journey towards financial recovery, the company continues to face operational challenges, including a significant number of uncashed checks. There are currently around 270,000 uncashed checks totaling $17 million, with the majority valued at less than $25. Voyager has set a deadline of April 20 for these uncashed checks to be claimed; otherwise, they will be voided.
Moreover, Voyager is still grappling with the aftermath of a data breach involving FTX. A thorough investigation is underway to determine the source and consequences of the breach, which led to the compromise of creditor data.
As of May 2023, a restructuring plan proposed that Voyager customers would recover 35.7% of their claims in cryptocurrency or cash. The crypto exchange reached a settlement with the FTC in November 2023, agreeing to pay $1.65 billion in monetary relief.
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