Voyager signals initial creditor payouts as bankruptcy proceedings continue

The bankrupt crypto broker Voyager Digital will make initial payments to creditors within the next few weeks.

4/ Voyager is also finalizing everything internally that is necessary to make distributions to creditors. We are hopeful that initial distributions will begin within the next few weeks.

— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) May 4, 2023

Payments are planned in fiat and digital assets.

The company is preparing for liquidation after the collapse of the asset sale to Binance.US. On April 25, the last bidder withdrew its bid, citing a ‘hostile and uncertain regulatory climate in the United States’.

The transition to liquidation is provided for in the bankruptcy court-approved restructuring plan. The parties will have ten days to challenge the filing after it is submitted.

In December 2022, Binance.US offered the highest price for Voyager’s assets — $1.02 billion.

However, regulators, including the U.S. Securities and Exchange Commission (SEC) and the New York State Department of Financial Services, opposed the deal.

During the proceedings, SEC representatives stated that Binance’s U.S. unit operates an unregistered securities exchange. The U.S. Department of Justice also opposed.

U.S. Attorney for the Southern District of New York Damian Williams noted that the agreement between the companies effectively rehabilitates Voyager and its staff after violations of the Securities Act.

On March 17, 2023, the U.S. Department of Justice filed a motion for an emergency freeze on the deal. Three days later, Voyager Digital challenged the motion, but a day later the agency filed a counter-appeal. On March 28, a court halted the asset-sale process. On April 19, authorities agreed with the creditors’ committee’s arguments, removing their objections.

On March 27, the CFTC filed a lawsuit against Binance and its CEO Changpeng Zhao. The regulator accused the crypto exchange of ‘willful evasion of U.S. law’ and non-compliance with rules.

In response Zhao said that the CFTC’s allegations contain ‘an incomplete account of the facts’, and that his company does not agree with many of the points’ characterizations.