Voyager Digital, a crypto lender that declared bankruptcy, has recently lifted the ban on withdrawals, allowing investors to reclaim their funds after nearly a year of frozen transactions. Since reinstating withdrawals on June 23, the platform has seen more than R4.7 billion worth of crypto assets flow out. This article explores the implications of Voyager Digital’s bankruptcy, the withdrawal process, and the ongoing legal actions surrounding the company, with a keen eye on potential impacts for South Africa’s cryptocurrency landscape.
R4.7 Billion Exits as Voyager Digital Reopens Withdrawals
After filing for Chapter 11 bankruptcy and freezing withdrawals, Voyager Digital recently permitted investors to access their funds again. However, this led to a net outflow of more than R4.7 billion worth of crypto assets from the platform. Currently, Voyager Digital’s coffers hold about R3.3 billion worth of crypto assets, reflecting a Clean Asset ratio of 96.15%. These assets include prominent cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), USDC, and SHIB.
As per the court-approved bankruptcy plan of May 17, Voyager Digital customers are set to receive 35.72% of their claims initially. They can opt to withdraw this amount as cryptocurrency through the Voyager app or as cash after a waiting period of 30 days. This first round of withdrawals aims to provide immediate relief to investors who have had their funds stuck for over a year.
Recovery Efforts and Ongoing Legal Challenges
While the initial distribution provides customers with some access to their funds, Voyager Digital’s focus remains on recovering additional assets to distribute to creditors. It’s been reported that Voyager is still owed about R12.2 billion by Three Arrows Capital, a bankrupt crypto hedge fund. Resolving this debt is crucial for the platform’s financial recovery.
Additionally, approximately R8.4 billion of customer funds will be made available to creditors, pending the resolution of Alameda Research’s preference claim against Voyager. However, this resolution isn’t expected until at least mid-September 2023. The outcome of this legal challenge will significantly impact the overall recovery for Voyager Digital’s creditors.
The Binance Acquisition and Government Intervention
Bankrupt Voyager Digital attracted the attention of Binance, one of the largest cryptocurrency exchanges globally, which expressed interest in acquiring the platform for a staggering R18.78 billion. However, the proposed deal was halted by the U.S. government, represented by agencies like the Securities and Exchange Commission (SEC) and the Department of Justice. Ongoing legal actions against Binance were cited as the reason for the intervention.
Voyager Digital’s decision to resume withdrawals after a prolonged period of halted transactions has resulted in a significant outflow of funds, totaling over R4.7 billion. The bankruptcy plan offers initial relief to customers, allowing them to access approximately 35.72% of their claims. The platform’s focus remains on recovering additional assets to distribute to creditors, with the resolution of ongoing legal challenges crucial to its financial recovery. While the company’s path to stability remains uncertain, the resumption of withdrawals brings hope to investors who have endured a long period of inaccessible funds.
The unfolding story at Voyager Digital provides important lessons for South Africa’s burgeoning crypto sector, highlighting the importance of robust risk management and regulatory compliance in the unpredictable world of cryptocurrencies. South African investors and regulatory authorities will likely watch the situation closely, extracting insights to improve the robustness of the local crypto market and to enhance protective measures for investors.
*Currencies in the article have been converted to the South African Rand