Voyager claimed 3.5 million customers before the company filed for bankruptcy. But such a big cryptocurrency broker filed for bankruptcy in July. This article will discuss, "Voyager Bankruptcy: What Does It Mean For Customers?" Let's get started.
Voyager Bankruptcy: What Does It Mean For Customers?
Voyager Digital filed for Chapter 11 bankruptcy on July 6, just a few days after suspending trading and withdrawals from its platform. Shares have been halted as a result.
The company claims the failure of Three Arrows Capital and the volatility in the market as reasons for this decision. According to CEO Stephen Ehrlich, Voyager will be able to optimize the amount of money it can recover through this process.
According to a researcher, It appears that bailout wasn't enough to save the company. The company, which is led by Sam Bankman-Fried, provided a $485 million credit line. However, each 30-day period is limited to $75 million in utilization. Strangely enough, Alameda also owes $376.8 million to Voyager.
In addition, it is unlikely that account holders will recover all their crypto back. The company's plan includes repaying customers a mix of crypto, Voyager stock, and money recovered from Three Arrows Capital, which owes $650 million.
What Will Happen Next?
The estimated 72% recovery of claims would go to general unsecured creditors and Voyager customers who had accounts on the platform.
Account users can expect to receive a mix of cryptocurrencies, US dollars, or USDC—a cryptocurrency pegged to the US dollar's value.
If the sale to FTX is finalized, account holders' payout currency will depend on whether they choose to migrate to FTX. Their ability to reclaim their currency will also depend on whether or not they transfer their accounts and which cryptocurrencies are supported by the FTX platform .
The "vast majority" of the more than 1 million account holders are expected to go over to the FTX platform, according to Voyagers' attorney.
Account holder claims also will be decided based on the fair market value of the cryptocurrency they held in their Voyager account on July 5, according to Voyager's court disclosures. That's when Voyager declared bankruptcy.
That means if a Voyager account had 1 Ether worth $1,131.60 on July 5, that claim is worth $1,131.60. That account holder will presumably get 72% of $1,131.60.
Once a customer determines their claim amount, they must then figure out their “initial distribution,” which will be a pro-rated share of their claim. The initial distribution will largely be funded by the FTX sale proceeds. Later payouts could come from other sources.
Users must register and maintain an account with FTX in order to receive an initial distribution that is mostly made in cryptocurrencies. After a migration time, customers who choose not to open an FTX account will ultimately receive a cash refund.
Under the proposed plan, the initial distribution customers receive in their FTX account depends on their claims and the 20-day historical average price of that cryptocurrency based on a future point in time that hasn't been publicly announced.
Customers of Voyager who use a cryptocurrency that FTX does not accept would be given USDC. According to Voyager filings, FTX's platform intends to develop in the following months to support other cryptocurrencies.
Voyager Bankruptcy: What Does It Mean For Customers? - Hopefully, this article can help you to understand it better.
