Voyager Digital has just received permission from the American bankruptcy court in New York to reimburse its customers for a sum totaling 270 million dollars.
A 270 million dollar reimbursement ordered by the bankruptcy judge
Since filing for Chapter 11 bankruptcy in July of last year, the company had lost access to its funds. A struggling firm may request to resort to Chapter 11 of American bankruptcy law. The debts between Voyager and its creditors will be handled through the court system as a result of this measure. Thus, its assets are secured. However, the business can carry on as usual and engage in negotiations with its creditors. They number more than 100,000, according to the bankruptcy statement. In exchange, Voyager Digital must update the bankruptcy judge on the status of its dealings with its borrowers.
Michael Wiles, the judge overseeing the case, finally gave the exchange permission to access its assets and force its consumers to pay up 270 million dollars. To support its request to access its Metropolitan Commercial Bank “For Benefit of Customers (FBO)” deposit account, the corporation submitted, in Wiles’ opinion, “adequate justification.”
The corporation had about $350 million in cash at the time of the bankruptcy filing. In addition, the exchange would have $1.3 billion worth of digital assets. The goal of this bankruptcy petition, according to Stephen Ehrlich, CEO and co-founder of Voyager, was to “maximize value for all stakeholders and especially customers.”
For the moment, only a partial refund
The court hasn’t made a decision regarding what will happen to the more than $1 billion worth of cryptocurrencies, even though the MCB is now permitted to restore the money to Voyager customers. This is the first stage in the process of releasing users’ assets from Voyager Digital. However, in comparison to the assets trapped on the platform, this is a pitiful reimbursement. Depending on how the bankruptcy case is going, they should eventually be utilized to pay creditors.
In specifics, the corporation claims that the customer’s money is not misplaced but rather is just frozen in the bank. In their reorganization plan, Voyager Digital clearly outlines how each consumer will be “reimbursed.” Coins seized from 3AC and cryptocurrency will make up client funds (the largest creditor). They will be augmented by native Voyager tokens and shares of the corporation upon its reorganization.
Despite Voyager’s announcement on July 11 that the users will receive their money back:
- Customer money belongs to you and will return to you, subject to a process of reconciliation and fraud prevention. All client money is held in a client account at Metropolitan Commercial Bank and contains the same amount as money in Voyager accounts.
It’s likely that Voyager clients won’t get all of their deposits refunded.
Confidence at an all-time low
One additional claim for the platform that can be deemed deceptive. In fact, the cryptocurrency corporation was charged with lying a few days earlier when it claimed that the FDIC insured both it and its clients. The Federal Deposit Insurance Corporation (FDIC) was established by Congress as a separate organization. It aims to keep the national financial system stable and the public confident in it. Voyager is accused of making “false and misleading” representations by the FED and FDIC. They advertised to customers that their cash were government guaranteed on their website, app, and social media platforms.
