The US Bankruptcy Court in New York has approved crypto brokerage Voyager Digital to refund $270 million to clients affected by the US Bankruptcy Court, wall street journal reports,
On Thursday, Presiding Judge Michael Wills allowed Voyager to return funds to customers held in a custodial account at Metropolitan Commercial Bank (MCB).
New Jersey-based crypto firm filed for Chapter 11 bankruptcy in July As crypto prices fell – creating a bank run that forced Voyager to halt withdrawals.
Following the liquidity crunch, Voyager sought the court’s permission to honor customer withdrawal requests for cash money held in custody at MCB.
Of the remaining funds on the platform, totaling more than $1 billion, Voyager said these relate to bankruptcy assets, which will be distributed among all creditors.
Voyager’s collapse came amid exposure to leading crypto hedge fund Three Arrows Capital (3AC).
Voyager’s Debt Liabilities Unpacked
Voyager delivered 3AC approximately $660 million, Although, In light of the hedge fund’s $200 million investment in Terra, it defaulted and could not repay the loan.
3AC’s default prompted Voyager CEO Stephen Ehrlich to seek help from Moelis & Company as a financial advisor.
Further debt obligations for Voyager include $34.4 million from Mike Novogratz’s investment firm Galaxy Digital and $17.5 million from digital asset lender Genesis Global Capital.
Both Galaxy Digital and Genesis Global Capital also had exposures in 3AC and Terra.
Galaxy Digital announced a $10.6 million share repurchase program in May after being exposed to Terra.
Michael Morrow Admitted to Genesis CEO series of tweets Without disclosing the size of the loan, Three Arrows’ loans had a weighted average margin requirement of over 80%.
Other reasons for Voyager’s bankruptcy may also result in excessive customer rewards.
After signing a deal with the Dallas Mavericks, it offered $100 worth of crypto rewardsWith the company offering annual rates between 8% to 10% Over 40 properties.
Voyager is expected to end its sale process in September, with FTX Trading offering to buy some of Voyager’s assets as well as taking on some of its clients.