Investors in the collapsed digital asset lender Voyager Digital finally have something to celebrate—a New York court has approved the lender to refund $270 million held in cash to its clients. Elsewhere, the company has spurned a ‘lowball bid’ by Sam Bankman-Fried’s (SBF) two companies, FTX and Alameda Research.
$270M refund approved, but over a billion dollars still under lock
In mid-July, Voyager’s legal team requested permission from the U.S. Bankruptcy Court for the Southern District of New York to honor client withdrawals from at least $350 million it held at the Metropolitan Commercial Bank (MCB). However, the bank told the Wall Street Journal that at the time of bankruptcy filing, the digital asset lender only had $270 million in its accounts.
In its filing, Voyager claimed it held the cash in a For Benefit of Customers (FBO) account at MCB. Customers have been depositing cash into this account and have it reflected on their Voyager dashboard.
“Reinstating access to withdrawals will alleviate customer concerns that access to their cash held in the [Metropolitan Commercial Bank] accounts, and the integrity of the platform, is restored,” the filing said.
In an August 4 hearing, Judge Michael Wiles gave the embattled lender the green light to refund clients.
“…the Court approved our proposal to restore access to cash held for the benefit of Voyager’s customers at Metropolitan Commercial Bank. We know how important it is to access your cash, and with this approval, we will soon begin processing cash withdrawals,” Voyager revealed in a blog post.
The company expects to start withdrawals on August 11. Clients with USD deposits will receive emails with more details about the withdrawal process before then. Once they make the withdrawal requests, they can expect their money in 5-10 business days. They can withdraw up to $100,000 via the app/ACH in a 24-hour period.
Voyager still holds over $1 billion in digital assets whose fate has yet to be determined.
While the USD-holding clients get to access their funds, Voyager is continuing with its bankruptcy proceedings, having filed for Chapter 11 bankruptcy. And as the proceedings continue, dozens of firms are lurking around, seeking to buy the firm at a steep discount. One of those eyeing Voyager is Sam Bankman-Fried, the “crypto lender of last resort,” but in its latest filing, Voyager spurned the disingenuous bid, calling SBF out for the lowball offer.
SBF’s ‘lowball bid dressed up as a white knight rescue’
In its filing in New York, Voyager claimed that it has received multiple bids to buy it in recent months, all higher than SBF’s, which it described as a “lowball bid dressed up as a white knight rescue.”
SBF made the bid two weeks ago through his two firms, FTX exchange and Alameda Research, a quantitative trading firm that has been linked extensively to Tether. He offered to purchase Voyager with cash and offer its clients early liquidity on their bankruptcy claims.
The clients would be able to (but not forced to) open accounts on the FTX exchange and have an opening cash balance funded by an early distribution on a portion of their bankruptcy claims. They can then withdraw it if they wish or even purchase other digital assets on FTX.
However, SBF made it clear that he wouldn’t be purchasing Voyager’s loans to Three Arrows Capital (3AC), the embattled hedge fund whose crash was seen by many as the Lehmann Brothers moment for the digital assets industry. 3AC owed Voyager over $650 million before it collapsed.
“The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business – a way that allows customers to obtain early liquidity and reclaim a portion of their assets,” SBF claimed at the time.
Voyager isn’t interested in the bid. It said in its filing that SBF’s is the lowest bid it has received. In addition, it rebuked SBF for violating the bankruptcy obligations by making the details of the bid public, presumably to pressure the lender into a quick sale.
SBF and Voyager already have deep ties. Alameda’s $377 million loan from the lender was among the largest it had issued, only second to 3AC’s $654 million loan. Earlier this year, when Voyager announced financial issues, Alameda lent it $75 million.
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