Voyager Digital Holdings Inc, a cryptocurrency brokerage firm has received approval from a New York Bankruptcy court to return USD$270 million in customer cash leaving a significant portion of client assets still frozen.
Judge Michael Wiles of the U.S. Bankruptcy Court in New York ruled that the recently bankrupt firm made out "a sufficient basis" for its argument that customers should not be allowed access to the custodial account held at New York-based Metropolitan Commercial Bank following Voyager filing for bankruptcy.
The Wall Street Journal said:-
Voyager is looking for ways to pay back customers, its largest creditor base, through a restructuring that turns them into owners or a possible sale of the business
While Voyager has filed for bankruptcy and is in the process of assessing how it can reunite customers with their deposits (both crypto and cash based), the firm is allegedly not in a position to honour the volume of withdrawal requests being made.
Voyager held approximately USD$270 million in cash in their bank account when they filed for bankruptcy, with close to $1.3 billion in digital assets. These volume of digiatl assets means there will be much more work done before customers can find out what they will receive, which in part justified the Court finding that only cash withdrawal requests, which are presently reconcilable, should be honoured.
According to Voyager, their motivation behind the resumption of a proportion of some withdrawals is to:
to avoid material(ly) harming customer moral
This may be too late given redemptions have been frozen for some time. This serves as a reminder of pre-emptive planning of client custody for digital currency exchanges and the importance of client funds not being used for business purposes. As regulation of digital currency exchanges draws nearer, standards seen in the traditional financial world will continue to be applied to digital currency exchanges.
FTX, together with trading firm Alameda Research, continues to press an offer to buy most of Voyager’s digital assets and digital asset loans as a way for Voyager customers to move forward without waiting for the bankruptcy process to slowly move through the Courts. Voyager has resisted what they call a "low ball bid" for the assets, but so far there seems to be no better offers coming forward.
Kommentare