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Voyager Digital Resumes Withdrawals, Witnesses Significant Outflow of Funds After Bankruptcy

Voyager Digital Resumes Withdrawals, Witnesses Significant Outflow of Funds After Bankruptcy

Voyager Digital, a cryptocurrency lending platform that recently filed for Chapter 11 bankruptcy, has attracted attention with its decision to permit investors to resume withdrawals after nearly a year of halted transactions. This move, however, has triggered a substantial outflow of over $250 million worth of crypto assets from the platform. With only $176 million worth of remaining assets, Voyager Digital now faces the challenge of navigating bankruptcy proceedings while attempting to recover additional funds for its creditors.

The resumption of withdrawals by Voyager Digital on June 23 has resulted in a surge of investors reclaiming their funds. This has led to an outflow of over $250 million worth of crypto assets, leaving Voyager Digital with $176 million in assets that include popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), USDC, and SHIB.

Under the bankruptcy plan approved by the court on May 17, customers of Voyager Digital are eligible to receive 35.72% of their claims initially. They have the option to withdraw this amount as either cryptocurrency through the Voyager app or as cash, subject to a 30-day waiting period. The purpose of this first round of withdrawals is to provide immediate relief to investors who have faced difficulties in accessing their funds for an extended period.

While the initial distribution allows customers to access a portion of their funds, Voyager Digital’s focus extends beyond immediate relief. The platform is actively pursuing additional asset recovery to distribute to its creditors. One significant challenge lies in the outstanding debt owed by Three Arrows Capital, a bankrupt crypto hedge fund that owes Voyager $650 million. Resolving this debt is crucial for Voyager Digital’s financial recovery and the further distribution of assets to its creditors.

Additionally, approximately $445 million of customer funds are subject to availability pending the resolution of Alameda Research’s preference claim against Voyager. However, the outcome of this legal challenge is not expected until at least mid-September 2023. The resolution of this matter will play a significant role in determining the overall recovery prospects for Voyager Digital’s creditors.

During its bankruptcy proceedings, Voyager Digital attracted the attention of Binance, one of the world’s largest cryptocurrency exchanges. Binance expressed interest in acquiring Voyager Digital for $1 billion. However, the proposed deal was halted by the U.S. government, specifically the Securities and Exchange Commission (SEC) and the Department of Justice, due to ongoing legal actions against Binance.

The U.S. government’s decision to block the Binance acquisition of Voyager Digital is a result of the ongoing legal challenges faced by Binance itself. The SEC and the Department of Justice deemed it necessary to prevent the acquisition from proceeding until these legal matters are resolved.

In conclusion, Voyager Digital’s recent decision to allow investors to resume withdrawals after a prolonged period of halted transactions has triggered a substantial outflow of funds, surpassing $250 million. This development has both positive and challenging implications for the platform as it navigates bankruptcy proceedings.

On the positive side, the resumption of withdrawals provides much-needed relief to customers who have been unable to access their funds for an extended period. Allowing investors to reclaim approximately 35.72% of their claims offers immediate financial support and addresses their concerns regarding locked-up assets. This step is an essential milestone in restoring trust and maintaining goodwill among Voyager Digital’s customer base.

However, the significant outflow of funds presents a new challenge for the platform. With only $176 million worth of remaining assets, Voyager Digital must carefully manage its resources while seeking to recover additional funds for its creditors. This task becomes more complex due to the outstanding debt owed by Three Arrows Capital, amounting to $650 million. Resolving this debt is crucial for Voyager Digital’s financial recovery and the equitable distribution of assets to its creditors.

Furthermore, the ongoing legal challenges, such as Alameda Research’s preference claim against Voyager, introduce further uncertainties into the process. Approximately $445 million of customer funds are subject to availability pending the resolution of this legal dispute, and the outcome is not expected until mid-September 2023. The resolution of these legal matters will significantly impact Voyager Digital’s overall recovery prospects and the ability to distribute assets to its creditors in a fair and timely manner.

Additionally, the U.S. government’s intervention to block the proposed acquisition of Voyager Digital by Binance adds another layer of complexity to the situation. The government’s decision is based on the ongoing legal actions against Binance, highlighting the importance of regulatory compliance and stability within the cryptocurrency industry. Navigating these regulatory challenges while addressing bankruptcy proceedings adds further intricacy to Voyager Digital’s path to financial recovery.

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Noah Ellis is a talented author and cryptocurrency analyst who specializes in covering the latest developments in the crypto world. As a regular contributor to Livemarkets.com, he provides in-depth news coverage and analysis of the rapidly evolving crypto landscape. Noah's expertise in blockchain technology and his ability to identify emerging trends and market shifts make him an invaluable resource for readers seeking to stay ahead of the curve. His reporting on the latest crypto news and events is widely respected in the industry and has helped many investors make informed decisions about their digital assets. Noah is also a sought-after speaker at crypto conferences and events, where he shares his insights and perspectives on the future of digital currencies.

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