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Crypto lender Voyager Digital’s efforts to reorganize under Chapter 11 have ended, according to a Reuters report, and a U.S. bankruptcy judge has approved their proposed liquidation plan.
The company filed for bankruptcy protection last July due to volatility in the cryptocurrency markets and the default on a massive loan to cryptocurrency hedge fund Three Arrows Capital, which will return customers about $1.33 billion worth of crypto assets. However, customers will only get back about 35% of their cryptocurrency deposits as the company winds down operations following a failed buyout attempt by cryptocurrency exchange Binance. US.
Voyager leaves only part of the deposits to customers
The Voyager bankruptcy case was complicated by two unsuccessful sales attempts during bankruptcy proceedings. The company initially sought to sell its assets to FTX for $1.42 billion, but that deal fell through when FTX collapsed in November. Binance. The US signed on to a $1.3 billion offer but canceled the deal on April 25, citing a “hostile and uncertain regulatory climate”.
According to the report, Voyager’s clients’ hopes for a recovery are now heavily dependent on the outcome of a lawsuit with FTX, which is seeking to recover $445 million in repayment of a loan that Voyager paid off before FTX went bankrupt.
However, if Voyager wins the lawsuit with FTX outright, the expected customer recovery will be 63.74%, according to Voyager court documents.
Voyager intends to pay customers with the same cryptocurrency that they had on their accounts. However, for deposits held in unsupported cryptocurrencies that cannot be withdrawn from the Voyager platform and for Voyager’s native VGX token, Voyager will pay out USDC Circle stablecoin to customers instead.
Voyager was one of several cryptocurrency lenders that filed for bankruptcy in 2022 following the boom of the COVID-19 pandemic. Other companies that have filed for bankruptcy include Celsius Network, BlockFi and Genesis Global Capital.
Did the SEC play a role in the failed acquisition of Binance. US?
There are speculations that the Securities and Exchange Commission (SEC) may have had a hand in the botched acquisition of Binance. US crypto lender Voyager Digital for $1.3 billion. The ransom was canceled in April, and Binance. The US cited a “hostile and uncertain regulatory climate”. However, some industry experts believe that the SEC’s increased focus on the crypto industry may have played a role in the failed acquisition.
The Securities and Exchange Commission is stepping up efforts to regulate the cryptocurrency industry. As a result, firms like Coinbase are exploring ways to expand their operations to other jurisdictions.
France, in particular, has welcomed these firms due to regulatory uncertainty in the United States. Market pundits and even senators have criticized the regulator’s approach, arguing that a clear set of rules is needed to promote innovation and diversify investment opportunities for U.S. clients of crypto companies. A clear regulatory framework will benefit not only the industry, but the country as a whole.
Sideways BTC price movement on a 1-day chart. Source: BTCUSDT on TradingView.com.
Featured image from iStock, chart from TradingView.com