Voyager Digital Secures $484 Million from FTX and 3AC Settlements

Voyager Digital has announced the recovery of $484.35 million from settlements with FTX, Three Arrows Capital (3AC), and Directors and Officers (D&O) insurance.

The announcement was part of a status update submitted to the United States Bankruptcy Court for the Southern District of New York, outlining the efforts to recover and allocate assets to creditors following the company’s financial decline.

$450 Million FTX Settlement and Major Recoveries

According to an April 9 filing, approximately $450 million of the reclaimed funds came from a settlement with FTX.

This agreement, inclusive of interest, accounts for roughly 25% of Voyager’s creditors’ original claims. The company plans to distribute this amount in an upcoming round, providing much-needed relief to its creditors.

The FTX debtors have agreed to forfeit their rights to the $5 million deposit held in escrow from Voyager’s bankruptcy sale process, with these funds being released to the Wind-Down Debtor’s estate.

Additionally, the FTX debtors and the Wind-Down Debtor waive and release all claims against each other, including any previously submitted proofs of claim. This agreement includes dismissing the pending FTX case.

Voyager also revealed that it has obtained a claim of approximately $675 million from its ongoing litigation with Three Arrows Capital (3AC). Out of this amount, $20.43 million represents Voyager’s proportionate share of the initial distribution from 3AC.

The plan administrator anticipates further payments as it progresses through its court proceedings and sells off assets.

In addition to these settlements, Voyager announced a breakthrough through D&O insurance mediation, which will allocate at least $14.35 million to benefit its creditors, further helping its recovery efforts.

Operational Challenges

However, amidst these positive developments, Voyager faces operational challenges, including dealing with uncashed checks. Around 270,000 checks totaling $17 million remain uncashed, with the majority, approximately 187,000, for amounts less than $25.

To address this issue, Voyager has set an April 20, 2024, deadline, after which all outstanding checks will be considered unclaimed and canceled.

Voyager also deals with the aftermath of an FTX data breach, adding complexity to its bankruptcy proceedings. An ongoing investigation is underway to identify the origin and consequences of the breach, which compromised creditor information.

Voyager initiated Chapter 11 bankruptcy proceedings in July 2022 due to serious events in the crypto market, such as the collapse of the Terra ecosystem in May.

By May 2023, a restructuring plan proposed that Voyager customers could recoup 35.7% of their claims in either cryptocurrency or cash. In November 2023, the crypto exchange settled with the FTC, agreeing to provide $1.65 billion in monetary relief.