Voyager advances in creditor repayment with $484M in settlements

Bankrupt cryptocurrency firm Voyager Digital has secured $484 million through various settlements, including agreements with FTX and Three Arrows Capital (3AC), as well as claims against Directors and Officers (D&O) insurance.

According to a filing with the bankruptcy court in New York, Voyager outlined that it has recovered a substantial portion of these funds, nearly $450 million, from a settlement with FTX. The collapse of the crypto market, triggered by the Terra ecosystem failure, led Voyager to file for Chapter 11 bankruptcy in July 2022.

Further complications arose in October 2023 when the U.S. Commodity Futures Trading Commission and the Federal Trade Commission (FTC) filed lawsuits against Voyager’s former CEO, Stephen Ehrlich, alleging fraudulent statements. The settlement with FTX, inclusive of interest, is expected to cover about 25% of the total claims made by Voyager’s creditors, with distributions slated to start shortly.

Meanwhile, Voyager has claimed $675 million in its ongoing litigation with Three Arrows Capital, with an initial distribution of $20.43 million representing Voyager’s share. The company anticipates future payments as assets are liquidated and additional settlement agreements are reached. A D&O insurance mediation settlement is also set to contribute at least $14.35 million to the creditor repayment efforts.

Despite these advances, Voyager continues to face operational challenges, including a significant number of uncashed checks. The company reported that around 270,000 checks, totaling $17 million and predominantly valued at less than $25, have yet to be cashed. A deadline of April 20 has been set for these checks to be claimed before they are voided.

Voyager is also addressing issues stemming from an FTX data breach, with an investigation underway to ascertain the breach’s origins and implications, which compromised creditor data.

As of May 2023, Voyager proposed a restructuring plan allowing customers to recover 35.7% of their claims in cryptocurrency or cash. Additionally, the crypto exchange reached a settlement with the FTC in November 2023, agreeing to $1.65 billion in monetary relief.