Voyager Digital Battles A $250M Crypto Drain After Bankruptcy Woes

Key Insights:

  • Crypto broker Voyager Digital hit by massive $250M in asset withdrawals following a year-long suspension.
  • Voyager’s bankruptcy plan aims to return $1.33B in crypto assets, recovering 35.72% of customer deposits.
  • Failed attempts to sell assets to Binance US and FTX further compound Voyager Digital’s financial woes.

Voyager Digital, a prominent crypto broker, is making headlines in the crypto space as it grapples with a significant outflow of funds surpassing $250 million. This substantial drain of assets came into play following the platform’s recent reactivation of its withdrawal services after a year of suspension. The resumption has incited a rapid response from creditors seeking to recover their assets, deepening Voyager Digital’s financial predicament.

A Turn of the Tide: Creditors Rush to Retrieve Funds

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Voyager Digital, already in the throes of a Chapter 11 bankruptcy filing, has grappled with significant asset withdrawals since it resumed its withdrawal services on June 23. This move came as part of its proposed liquidation plan, approved by U.S. Bankruptcy Judge Michael Wiles, to return approximately $1.33 billion in crypto assets to its customers. Consequently, the platform’s balance, previously at $426.8 million, has now plummeted to $176.38 million. Besides this, multiple transactions worth more than $1 million have been reported.

Voyager Average Balance Over Time (Source: Dune Analytics)

Dune Analytics data showcases the dramatic outflow from Voyager Digital. Over $250 million in crypto assets have been withdrawn, significantly reducing the platform’s retained assets to roughly $176 million. This represents a Clean Asset ratio of 96.15%. The owned assets include a broad range of tokens, such as $69 million in BTC, $50.99 million in ETH, $18.56 million in USDC, and $15.7 million in SHIB.

The Road to Recovery: Voyager’s Liquidation Plan

Voyager Digital’s troubled journey began when it filed for bankruptcy protection in July 2022, citing market volatility as a primary cause. However, the firm received approval for its liquidation plan in May, allowing customers to recover 35.72% of their deposits. Notably, the plan’s success hinges on resolving the ongoing FTX/Alameda preference claim dispute and potential recoveries from third-party claims and as a creditor in the Three Arrows Capital liquidation.

Despite the firm’s financial predicament, it has expressed hope for additional recoveries that may allow other creditor payouts in the future. This depends on the successful pursuit of any further claims against third parties and any rallies made by the Voyager estate as a creditor.

Moreover, Voyager Digital’s financial woes were exacerbated by two failed attempts to sell its assets to Binance US and FTX, highlighting its complex challenges.

Hence, Voyager Digital’s story serves as a sobering reminder of the high-risk nature of the crypto market. Additionally, it underscores the need for robust financial management and strategy, particularly for firms operating in the ever-evolving crypto space.

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