Voyager Digital has chosen not to sue its top executives for incompetence, despite their role in approving a huge loan to Three Arrows Capital (3AC) without due diligence. That loan was a key element that led to the bankruptcy of Voyager Digital. Court documents filed Oct. 17 show that a special internal Voyager Digital committee has proposed that CEO Stephen Ehrlich and chief commercial officer (formerly CFO) Evan Psaropolous keep their jobs and not be sued.
The court filing describes the due diligence process for the 3AC loan:
“On February 13, 2022, 3AC provided Voyager with a statement signed by one of its founders, Kyle Davies, containing a single sentence stating that the NAV [valor neto de los activos] from 3AC to January 1, 2022 was USD 3,729 million. Unlike other major borrowers of Voyager assets, 3AC did not provide a balance sheet (audited or unaudited). In response to Voyager’s formal due diligence questionnaire, 3AC subsequently provided a description of its corporate structure, certificates of solvency and incorporation, and a copy of its anti-money laundering policies and controls.”
The commission found no evidence of fraud in the executives’ actions. According to the court filing, Ehrlich and Psaropolous are “making additional contributions to the Plan of Reorganization pursuant to agreements reached with the Special Committee.” According to Bloomberg, Ehrlich will pay the company $1.125 million in cash under the committee’s proposal, which is subject to approval by the bankruptcy judge. The company has $20 million in directors’ and officers’ liability insurance to claim as well.
Y’all. Voyager Digital filed an amended disclosure statement today in its chapter 11 bankruptcy case and its disclosure about 3AC is F*CKING bonkers. pic.twitter.com/zxYFmouerS
— PETITION (@petition) October 18, 2022
All. Voyager Digital today filed an amended return in its chapter 11 bankruptcy case and its revelation about 3AC is insane.
Cryptocurrency exchange Voyager Digital made an unsecured loan of 15,250 Bitcoin (BTC) and 350 million USD Coin (USDC) to Singaporean crypto hedge fund 3AC in March with the approval of Ehrlich and Psaropolous. When 3AC failed to repay the loan in late June, Voyager Digital issued the company a notice of default. 3AC was forced to liquidate by the action of Voyager Digital on June 27. Voyager Digital first cut withdrawal amounts, then froze trading, deposits, withdrawals and the rewards that same week. Voyager Digital filed for bankruptcy protection on July 6.
According to several reports, the executives’ immunity from the lawsuit was part of the agreement that allowed FTX US to purchase the assets of Voyager Digital at auction on September 26.
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