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Bankrupt Crypto Firm Voyager Digital Approved to Release $270 Million in Cash Deposits

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The court allowed now-defunct and bankrupt Voyager Digital to distribute $270 million in funds to creditors and affected customers. The news comes after Voyager was ordered by the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board to remove any claims claiming Voyager is insured by the FDIC. The US Bankruptcy Court in New York and Judge Michael Wiles allowed Voyager’s custodian, Metropolitan Commercial Bank, to release $270 million.

New York bankruptcy court approves $270 million release from Voyager custodian

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TSX-listed cryptocurrency exchange Voyager Digital (OTCMKTS: VYGVF) reported in late June that hedge fund Three Arrows Capital owed the company $655 million. Then, on July 1, 2022, Voyager suspended trading, deposits, and withdrawals to deal with the volatile “market conditions” of the cryptocurrency.

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A week later, Voyager filed for bankruptcy protection, citing “prolonged volatility and contagion in the cryptocurrency markets.” Voyager shares changed hands at the April 2021 stock peak at $29.86 per share, and today’s shares are changing at $0.34 per share.

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Now, Bankruptcy Court Presiding Judge Michael Wiles of New York has authorized the withdrawal of $270 million from Voyager’s Metropolitan Commercial bank (MCB) depositary, the Wall Street Journal (WSJ). informed.

MCB explained to the WSJ that it had $270 million when Voyager filed voluntary petitions for a Chapter 11 reorganization. In late July, FTX crypto exchange founder and CEO Sam Bankman-Freed detailed that FTX was offering early liquidity to Voyager customers.

In addition to Voyager, Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy protection and crypto lender Celsius filed for Chapter 11 bankruptcy. argued it had about 1.7 million customers before the crash.

Celsius clients recently petitioned a bankruptcy judge to unlock funds held on the platform. One customer said it was “an emergency” as he needed the money “just to keep a roof over his family and food on their table.”

Voyager is expected to complete its bankruptcy process by the end of September 2022, but the Voyager platform is said to hold $1.3 billion worth of cryptocurrencies received from 3.5 million customers. CNBC informed On August 3, Voyager CEO Stephen Ehrlich raised over $30 million by selling Voyager shares in February and March 2021.

Although Voyager is a publicly traded firm, it adopted an Automatic Securities Disposal Plan (ADSP) last year on Dec. 31, 2021 following the sale of shares by Erlich. CNBC Rohan Goswami reports that on January 20, 2022, the Voyager CEO removed the ADSP structure. Voyager Digital also had a deal with the Dallas Mavericks and business relationships with Genesis Global Capital and Galaxy Digital.

What do you think about the Voyager bankruptcy judge allowing $270 million to be released from the company’s custodial MCB? What do you think about Erlich cashing out Voyager shares at the peak of the stock price? Let us know your thoughts on this in the comments section below.

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Credit : news.bitcoin.com

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