Former Voyager executive proposes an alternative restructuring plan for the broker

Shingo Lavin, founder of Ethos and former Voyager Digital chief innovation officer, filed an objection with the bankruptcy court to the crypto broker’s proposed restructuring plan.

The petition was filed in the U.S. Bankruptcy Court for the Southern District of New York. The applicant is Emerald Ocean Ventures, the investment firm run by Lavin together with his father, Adam.

Although we do not know the reasons why the Debtors have not been more accommodating, we are concerned that management may be seeking to keep control

If this is the case, it would be bad for creditors. Potential plans that could provide a recovery should be vetted and considered

— shingolavine.eth (@shingolavine) July 29, 2022

«We, the co-founders of Ethos, have developed a restructuring plan that would deliver greater recoveries to creditors within the Voyager bankruptcy proceedings. We believe we were not given adequate access and a fair opportunity. Today we filed suit», — Lavin wrote.

Ethos is behind the development of the Bedrock blockchain platform. In 2019 Voyager bought the startup for $4 million. After the deal Lavin took the post of CIO of the crypto broker and joined its board. In February 2021 he left the company due to “internal disagreements”.

Lavin criticized Voyager’s approach to handling user funds. He said centralized risk-taking from the outset jeopardised the broker’s clients.

«In my view, Voyager crashed not due to market conditions or the global economy. I believe it crashed because of reckless lending and risk-taking. […] The market crash was simply a match that lit this fire», wrote him.

The restructuring plan presented by Lavin and his father consists of eight points:

• Replace the broker’s leadership and reorient the company toward its “core crypto-technical assets”;
• Introduce a new culture based on innovation, transparency and profitability;
• To ensure the safety of client funds, implement technical solutions based on Ethos SmartKey (used in the non-custodial Universal Wallet);
• Cease lending-related operations;
• “Reload” the trading platform;
• Integrate the ability to trade in real time from non-custodial wallets;
• Implement “sharded-key storage” so that clients can restore access to assets, and launch a suite of business subscription services;
• Launch a recovery token to pay creditors.

Lavin stressed that to refine the plan he needs access to information about Voyager’s business; in his words, the broker’s management is obstructing this.

«We tried to gain access to data and become “authorized participants”, but so far without success. We believe this does not contribute to a fair process — especially when we have a good-faith assumption», — he told Axios.

Earlier, the FTX exchange proposed that Voyager clients open accounts into which the proceeds from their bankruptcy claims against the crypto broker would be deposited. With the court’s consent and approval, they would gain access to the assets earlier than in a standard liquidation process.

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