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Voyager Digital Files Chapter 11 Bankruptcy in New York

Cryptocurrency broker Voyager Digital Ltd. said that it has filed for Chapter 11 bankruptcy in New York.

The bankruptcy was filed days after the company suspended withdrawals and trading on its platform. The company has said that it will seek recognition of the case in its home country Canada, where it is listed.

According to The Block, per the petition for Voyager Digital Holdings, estimated assets are between $1 billion and $10 billion, with between $1 billion and $10 billion in estimated liabilities. The estimated number of creditors exceeds 100,000.

Currently, three business entities – Voyager Digital Holdings, Voyager Digital LLC and Voyager Digital, Ltd. – are seeking protection.

The three largely identical petitions were submitted via the Southern District of New York bankruptcy court.

Last week, Voyager halted users’ access to withdrawals, deposits and trading, citing the present market conditions. “This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” CEO Stephen Ehrlich said at the time.

Prior to the suspension of withdrawals, Voyager had issued a notice of default to hedge fund Three Arrows Capital Ltd. over failed repayment of a $650 million loan. The hedge fund was also ordered to liquidate after the crash of cryptocurrencies it had heavily invested in.

Three Arrows itself also filed for Chapter 15 bankruptcy last week.

Voyager stated that it is “actively pursuing all available remedies for recovery” from Three Arrows, including through court-supervised processes in the British Virgin Islands and New York.

FTX Wins Bid to Take Over Bankrupt Voyager's Assets

Digital-asset exchange FTX will now acquire the assets of bankrupt crypto brokerage Voyager Digital Ltd.

FTX took over the assets after winning an auction with a bid of about $50 million, the information was shared by people familiar with the matter.

The digital-asset exchange is controlled by billionaire Sam Bankman-Fried.

The purchase has come after several earlier attempts by the FTX to bail out or acquire Voyager, according to Bloomberg.

New York-based Voyager had about 3.5 million users at the end of March, and 1.19 million funded accounts.

Former Wall Street Journal reporter Liz Hoffman broke the news on Twitter about FTX winning the auction and the acquisition of Voyager. She also shared price details, citing people she did not identify.

“Crypto exchange FTX is the winning bidder for bankrupt crypto lender Voyager, ppl familiar said. Purchase price of ~$50m but could eventually be twice that if AUM and other milestones are hit,” she tweeted.

Voyager filed for bankruptcy protection in July. It did so after a failed attempt by Alameda Research to bail it out with a revolving line of credit. Alameda Research is a trading house affiliated with FTX.

Soon after that attempt, FTX and Alameda disclosed a joint bid for Voyager. However, Voyager called it a “low-ball” offer and declined the attempt. While in September, Alameda said it will return about $200 million worth of Bitcoin and Ether it had borrowed from Voyager by the end of the month.

Besides Voyager, Bankman-Fried has bought several distressed crypto firms, through which he has scooped of customers and valuable technologies at a cheaper price.

Bankman-Fried is estimated to own more than 50% off FTX, 70% of FTX US, and almost all of Alameda.

Crypto platform BlockFi was also under FTX’s acquisition radar earlier this year, along with a potential takeover of Robinhood Markets Inc., where Bankman-Fried owns a stake.

According to a source, FTX is in the process of raising a $1 billion funding round. The deal has not closed yet or been made public, the source familiar with the deal added.

Reportedly, negotiations are ongoing and confidential, and the company will raise as much as $1 billion in order to keep the previous valuation of $32 billion, but conditions could be changed, according to sources.

As reported by Blockchain.News on Feb 1, FTX Derivatives Exchange has concluded its Series C funding round, which raised $400 million to increase its valuation to $32 billion. Current existing investors include Singapore’s Temasek, SoftBank’s Vision Fund 2, and Tiger Global.

Voyager Customers Could Get 72% if Bankruptcy Sale Succeeds

Bankrupt crypto lender Voyager may repay customers 72% of their accounts’ value if the company can sell itself to digital-asset exchange FTX US.

FTX US was able to secure a two-week-long auction for Voyager under a deal connected to court approval of the creditor payment plan, according to lawyers.

However, Voyager can choose to cancel the deal if they are able to get a higher deal that will pay its customers more. US Bankruptcy Judge Michael E. Wiles approved this agreement on Wednesday.

Wiles has also urged Voyager to a “fiduciary out,” which is a standard bankruptcy clause. It allows companies under protection from the bank to accept higher offers until a sale is final.

Voyager bankruptcy attorney Christine Okike has told Wiles that FTX is currently the “only viable alternative” for the company. Still, they have agreed to change how the fiduciary out is worded to ensure a better offer can be considered.

According to Voyager, Wiles has been requested to provide permission to send the payout plan to creditors and customers for a vote. Following that, Wiles has also been asked to approve the sale if creditors vote in favour.

Voyager’s sale to FTX has been valued at about $1.4 billion, of which $51 million is in cash. Also, part of the sale, FTX will be moving customers onto its platform.

Under the payout plan, customers who had digital currencies on Voyager’s platform can be paid in that form once FTX takes over if FTX supports that type of currency, lawyers told Wiles.

The purchase has come after several earlier attempts by the FTX to bail out or acquire Voyager, according to Bloomberg.

New York-based Voyager had about 3.5 million users at the end of March and 1.19 million funded accounts.

Soon after that attempt, FTX and Alameda disclosed a joint bid for Voyager. However, Voyager called it a “lowball” offer and declined the attempt. While in September, Alameda said it would return about $200 million worth of Bitcoin and Ether it had borrowed from Voyager by the end of the month.

Besides Voyager, Bankman-Fried has bought several distressed crypto firms, through which he has scooped customers and valuable technologies at a cheaper price.

Bankman-Fried is estimated to own more than 50% of FTX, 70% of FTX US, and almost all of Alameda.

Investors Sell FTX, Celsius, BlockFi, Voyager

Some investors who hold claims on FTX, Celsius Network, BlockFi, and Voyager Digital are attempting to sell such rights to other parties so that they don’t have to wait for the lengthy bankruptcy process that these companies will have to go through. This is done so that the investors don’t have to wait for the companies to be forced to file for bankruptcy.

There are at least hundreds of investors who have been negatively impacted by the recent failures of cryptocurrency platforms FTX, Celsius, BlockFi, and Voyager and do not wish to wait for a drawn-out bankruptcy process that does not guarantee that they will even be able to get anything back, according to the information that was provided by the startup company Xclaim, which specializes in the trading of cryptocurrency claims. Xclaim is a company that specializes in cryptocurrency claims trading.

In spite of the possibility that they would incur some financial losses as a direct result of this transaction, the investors have decided to put their claims up for auction in the hope of turning a profit of some sort from the current predicament.

There were over 10,000 claims that had been posted, with 9,072 claims having been posted on Celsius Network, 93 claims having been posted on Voyager, 67 claims having been posted on FTX, and 23 claims having been put on BlockFi.

Matt Sedigh, the man who founded Xclaim, recently gave an interview to the Wall Street Journal in which he stated that his company has been taking calls from creditors located all over the world.

According to the executive, two thirds of the claims that were submitted came from creditors located in China, Hong Kong, and Taiwan, respectively.

It has come to the attention of certain debt investors and hedge funds that they may be interested in purchasing claims.

There have been a number of companies, including Contrarian Capital Management, Invictus Global Management, and NovaWulf Digital Management, that have acquired parts of the claims.

During this period, Celsius is making preparations to introduce a motion that will extend the deadline for users to submit their claims. This motion will allow for more time for consumers to submit their claims.

According to recent allegations, former FTX CEO Sam Bankman-Fried is believed to have cashed out a total of $684,000 in the time after he was released on bond.

Mark Cuban To Testify On Voyager Marketing

Next month, the owner of the Dallas Mavericks, Mark Cuban, is scheduled to give a deposition as part of the defense against a potential class-action lawsuit alleging that he promoted a Ponzi scheme in the form of the now-defunct cryptocurrency lender Voyager Digital. The lawsuit alleges that Cuban was aware of the Ponzi scheme and failed to stop it.

U.S. Magistrate Judge Lisette M. Reid issued an order on January 9 denying Cuban’s motion to break the deposition into two sessions. Instead, the judge ruled that Cuban’s complete deposition would be conducted on February 2 in Dallas, Texas. Cuban appealed this decision, but the request was refused.

Before February 23, two workers of the Dallas Mavericks will testify in a deposition that is being taken as part of the defense.

In addition, the court ruled that the case’s three plaintiffs, Pierce Robertson, Rachel Gold, and Sanford Gold, would each give a deposition prior to the end of this month.

The attorneys for the plaintiffs expressed their delight on January 9 in an interview with the newspaper Law360, which covers legal news, that the court had rejected Mark Cuban’s requests to suspend and postpone the discovery process.

A representative for Cuban’s legal team also talked with Law360 and said that the deposition of the plaintiffs would address questions about standing, claimed false claims that were included in the lawsuit, and inquiries regarding the Voyager accounts that were owned by the plaintiffs.

The contested complaint was first filed on August 10 of this year. The plaintiffs argue that Cuban misrepresented Voyager on many times before it went bankrupt, including false claims that it was cheaper than its rivals and that it offered trading services “commission-free.”

In addition to this, the lawsuit asserts that the company sold unregistered securities and that Cuban and Stephen Ehrlich, the CEO of Voyager, used their expert knowledge to persuade uneducated investors to invest their life savings in what they now believe to be a Ponzi scheme. Cuban is also named in the lawsuit.

On July 6, Voyager filed its bankruptcy petition under Chapter 11 after struggling with cash challenges brought on by the crypto winter and a significant debt to Three Arrows Capital that was defaulted on by the latter. The reorganization of the company was underlined as the reason for the transfer by the company.

US Judge Supports Government Bid to Quash Binance.US's $1 Billion Deal

The US government’s bid to quash a $1 billion deal by Binance.US to buy the assets of Voyager, a bankrupt crypto lender, has received support from District Judge Jennifer Rearden. The judge stated that the government had a “substantial case on the merits” and promised to move quickly to settle the dispute, given that delays could cost as much as $10 million per month for the estate. This decision came after objections from the US Attorney, who argued that the contract effectively rendered Voyager immune by exculpating it from breaches of tax or securities law.

Earlier in March, U.S. Bankruptcy Judge Michael Wiles had approved the sale, but Judge Rearden put it on hold this week. In her further reasoning published on Friday, Judge Rearden appeared sympathetic to government arguments, saying that “the Exculpation Clause appears to go further than the quasi-judicial immunity doctrine allows.” The judge also noted that the government’s arguments have “gone entirely unrebutted” by Voyager and its creditors, neither of which has provided any authority for the proposition that a bankruptcy court can release criminal liability.

Binance.US’s bid to purchase Voyager’s assets for $1 billion has been embroiled in controversy, with the US government seeking to block the deal due to concerns about Voyager’s alleged breaches of tax and securities law. Binance.US is a cryptocurrency exchange that operates in the US and is a subsidiary of the larger Binance platform. Voyager is a crypto lender that filed for bankruptcy in February 2022 after facing regulatory issues.

The controversy surrounding the deal underscores the ongoing debate about the regulation of cryptocurrencies and related assets. While cryptocurrency advocates argue that the decentralized nature of these assets makes them immune to traditional forms of regulation, governments and financial institutions are increasingly seeking to impose greater oversight and control. The situation with Binance.US and Voyager highlights the complexities and challenges involved in reconciling these competing interests.

In addition to the issues related to the sale of Voyager’s assets, the case also raises broader questions about the role of bankruptcy courts in addressing criminal liability. Judge Rearden’s decision to put the sale on hold suggests that the court is taking seriously the concerns raised by the US government. The ultimate outcome of this case could have far-reaching implications for the regulation of cryptocurrencies and the legal responsibilities of companies operating in this space.

Google, UK, FTX and Binance in Crypto News

In the latest crypto news, Google has expanded its Web3 program by adding 11 blockchain partners to its Google for Startups Cloud Program. The program will provide expertise, grants, and services to emerging Web3 entrepreneurs. The UK government has also allocated $125 million to establish an AI task force aimed at promoting the country’s sovereign capabilities, such as public services, and fostering the adoption of safe and reliable AI foundation models. On the other hand, FTX has agreed to sell its LedgerX futures and options exchange and clearinghouse to M7 Holdings for $50 million, while Binance.US has backed out of its $1 billion Voyager asset purchase due to the “hostile and uncertain regulatory climate in the United States.”

In more detail, Google has partnered with 11 Web3 blockchain firms, such as Alchemy, Polygon, Celo, and Hedera, to expand its Google for Startups Cloud Program. As part of the program, pre-seed Web3 startups can receive up to $2,000 in Google Cloud credits valid for two years, while seeded startups can access $200,000 over two years for Google Cloud and Firebase usage. Additionally, blockchain partners are offering grants of up to $3 million to seeded companies in the program. Nansen, a blockchain analytics company, has also partnered with Google Cloud to provide real-time blockchain data for startups.

Meanwhile, the UK government has launched an AI task force to accelerate the country’s readiness for AI. The task force will focus on promoting sovereign capabilities, such as public services, and fostering the adoption of safe and reliable AI foundation models. The task force aims to launch its first pilots of AI usage and integration targeting public services in the next six months. The UK is committed to becoming a science and technology superpower by 2030 and is pushing for “safe AI” that regulates technology to “keep people safe” without limiting innovation.

In terms of cryptocurrency exchanges, FTX has agreed to sell its LedgerX futures and options exchange and clearinghouse to M7 Holdings for $50 million. The deal is subject to approval from the US Bankruptcy Court for the District of Delaware, which is scheduled to hear the case on May 4. FTX purchased LedgerX in August 2021 to expand its spot trading services, and the sale is part of FTX’s efforts to monetize assets and deliver recoveries to stakeholders.

On the other hand, Binance.US has backed out of its agreement to purchase bankrupt cryptocurrency brokerage Voyager Digital’s assets for $1 billion, citing the “hostile and uncertain regulatory climate in the United States.” The Voyager Official Committee of Unsecured Creditors expressed its disappointment at the news and said it was investigating potential claims against Binance.US. Voyager and the creditors’ committee will now work on distributing cash and crypto to customers directly via the Voyager platform.

In conclusion, the crypto world has seen significant developments this week, from Google expanding its Web3 program to the UK government allocating funding for an AI task force. FTX is set to sell LedgerX, and Binance.US backs out of the Voyager asset purchase. The industry remains dynamic and unpredictable, with companies and governments adapting to the ever-changing regulatory environment.