Bankrupt crypto firm Voyager Digital has achieved a significant milestone in its financial recovery by securing $484 million through settlements with FTX, Three Arrows Capital, and Directors and Officers (D&O) insurance claims. This move brings the company closer to compensating its creditors.
According to a filing 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, around $450 million, came from a settlement with FTX. Voyager filed for Chapter 11 bankruptcy in July 2022 due to various shocks in the crypto market, including the collapse of the Terra ecosystem in May.
In October 2023, the U.S. Commodity Futures Trading Commission and the Federal Trade Commission (FTC) filed lawsuits against former Voyager CEO Stephen Ehrlich for making fraudulent statements. The recent settlement with FTX, including interest, accounts for approximately 25% of the total claims made by Voyager’s creditors and is expected to be distributed soon.
Aside from the agreement with FTX, Voyager has also obtained a claim of approximately $675 million through its ongoing litigation with Three Arrows Capital. Out of this amount, Voyager’s share of the initial distribution from 3AC is $20.43 million.
The administrator anticipates further payments to be made in the future as assets are sold and additional litigation settlements are secured. A settlement reached through D&O insurance mediation will also allocate a minimum of $14.35 million to benefit Voyager’s creditors.
As Voyager continues its journey towards financial recovery, the company faces operational challenges, including a high number of uncashed checks. There are around 270,000 uncashed checks worth $17 million, with the majority being valued at less than $25. Voyager has set a deadline of April 20 for claimants to cash these checks, after which they will be voided if not claimed.
Voyager is also grappling with the consequences of a data breach involving FTX. An investigation is underway to determine the source and impact of the breach, which resulted in 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, resulting in $1.65 billion in monetary relief.
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