Voyager Digital, a crypto lender that declared bankruptcy, has recently reopened withdrawals for investors, leading to an outflow of over $250 million in crypto assets. This comes nearly a year after the company filed for Chapter 11 bankruptcy and suspended all withdrawals.
The bankruptcy of Voyager Digital occurred in the aftermath of the Terra ecosystem’s collapse, which led to the loss of over $40 billion in investor funds. This event triggered a severe liquidity crisis for Voyager Digital, leading to its bankruptcy.
The company’s decision to allow withdrawals again was made on June 23. Since then, data from Dune Analytics shows that the platform has seen a net outflow of $250 million in crypto assets. Despite this significant outflow, Voyager Digital still holds $176 million in crypto assets, maintaining a Clean Asset ratio of 96.15%. These assets include 2,287.4 BTC, 27,363.7 ETH, 18,558,340 USDC, and 2,060 trillion SHIB.
The court approved Voyager Digital’s bankruptcy plan on May 17. According to this plan, customers would initially receive 35.72% of their claims. They could choose to withdraw this amount either as cryptocurrency through the Voyager app or as cash after a 30-day waiting period.
The bankruptcy plan also revealed that Three Arrows Capital, a bankrupt crypto hedge fund, still owes Voyager $650 million. While the first round of withdrawals allows customers to access just over 35% of their funds, the main focus will be on recovering more assets to distribute to creditors once this initial distribution is finished.
Furthermore, an additional $445 million of customer funds is expected to be available to creditors, but this depends on the resolution of Alameda Research’s preference claim against Voyager. This resolution is not likely to happen until at least mid-September 2023.
The resumption of withdrawals has brought some relief to investors who had their funds stuck for over a year. However, the future of Voyager Digital remains uncertain as it navigates through the complex process of bankruptcy and asset recovery.
Previously, Voyager reportedly owed $1.1 million to the law firm Kirkland & Ellis LLP for their bankruptcy case. The firm, which has represented other crypto firms like Celsius and BlockFi, has seen a surge in business amidst the 2022 crypto bear market. The legal complexities of Voyager Digital’s situation underscore the challenges faced by crypto platforms navigating bankruptcy proceedings.
