Court Documents Reveal Voyager’s Plan To Reimburse Customers, But There Is A Catch

Voyager Customers Are Not Likely To Get Full Compensation.

Court documents filed by temporarily defunct crypto lender Voyager have revealed that the firm is not likely to make repayments on the full sum owed to clients, according to a Bloomberg report on Wednesday.

Voyager’s Chapter 11 filing details that users would be “impaired” by the bankruptcy filing process, implying that Voyager has no plans to reimburse users with their exact investment.

According to the firm’s Chapter 11 bankruptcy filing, Voyager intends to repay users with a mix of deposited crypto assets, stock from the company after restructuring, Voyager tokens, and debts recovered from their largest debtor Three Arrows Capital which is currently undergoing liquidation processes in the British Virgin Islands.

However, Voyager also notes that customers with dollar deposits would only be compensated “after a reconciliation and fraud prevention process” with Metropolitan Commercial Bank, with whom it holds an omnibus account.

It is worth noting that Voyager did not keep user funds in separate accounts but rather mixed them into asset-specific holdings. This is a practice that the US SEC has often called into question. 

The firm currently reports having $1.3 billion in crypto assets on its platform, even as it is owed about $1.12 billion in loans. Voyager’s largest debtors include Three Arrows Capital, Sam Bankman-Fried’s Alameda Research, and Mike Novogratz’s Galaxy Digital.

Voyager is one of the several crypto lenders to limit or halt operations entirely as the crypto markets continue to trend downward. At the time of writing, it is the first to file for bankruptcy, even as reports reveal that Celsius is also considering the option.

It is worth noting that Voyager’s bankruptcy proceedings will give insight into how the courts apply insolvency laws in the emerging market.