Some Voyager Digital account holders were surprised to discover their deposits weren’t as protected as they thought after the cryptocurrency broker and lender filed for bankruptcy protection on Tuesday. This could mean further consequences for Voyager Digital.
Voyager Digital filed for Chapter 11 bankruptcy, claiming debts of up to $10 billion to 100,000 creditors, in a crisis sparked after Singaporean hedge fund Three Arrows Capital (3AC) defaulted on a 15,250 Bitcoin (BTC) loan. ) and 350 million USD Coin (USDC) a week earlier.
According to the Voyager Digital website, “Your dollars are held by our banking partner, Metropolitan Commercial Bank, which is FDIC insured, so the money you have in Voyager is protected.” The bank has $350 million in deposits from Voyager Digital clients.
The Federal Deposit Insurance Corporation (FDIC) of the United States insures accounts up to $250,000 per depositor in the event of a bank failure, Metropolitan Commercial Bank explained in a statement, adding that the FDIC does not offer protection against Voyager Digital bankruptcy or cryptocurrency loss.
Statement from Metropolitan Commercial Bank about #FDIC insurance for #Voyager customers. Bad news, I’m afraid. pic.twitter.com/3PMVYNZkQw
— Frances Schadenfreude Cassandra (@Frances_Coppola) July 2, 2022
According to The Wall Street Journal on Thursday, unnamed sources said hoped that Voyager Digital depositors would finally receive all the cash in their bank accounts, as promised by Voyager Digital. A source also told the newspaper that the FDIC was looking into the Voyager Digital ads.
Voyager Digital said its proposed reorganization plan provided that, subject to various contingencies, “customers with crypto in their account(s) will receive in exchange a combination of the cryptocurrencies in their account(s), proceeds from the 3AC recovery, common stock in the newly reorganized company, and Voyager tokens “.
Two most interesting things in the Voyager bankruptcy petition:
(1) Voyager’s second largest exposure is to Alameda Research. So there’s some recycled capital. Voyager loans Alameda $377M, & Alameda reloans Voyager $75M. Plus Alameda is Voyager’s largest shareholder (9.5%). 1/
— Adam Levitin (@AdamLevitin) July 6, 2022
Voyager Digital was also noted to have a complex financial relationship with Alameda Research, backed by Sam Bankman-Fried. Alameda Research is at the same time Voyager Digital’s largest shareholder, the second largest creditor with $377 million, and owes Voyager Digital $75 million.
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