Voyager Digital is a cryptocurrency “bank”. It isn’t regulated like a bank, which a problem for users. The have debit cards and make loans. They trade crypto. Accept deposits. They also offered insane “rewards” (12%) so they could invest in the crypto space.
In order to fuel these crazy payouts, they had to make risky cryptocurrency plays.
One investment was in Three Arrows Capital crypto hedge fund. $650 million worth.
Unfortunately for Voyager Digital, Three Arrows got themselves in trouble when their investments flat lined and the crypto market tanked.
As a result, Voyager Digital filed for bankruptcy reorganization. THEY WERE NOT HACKED, THEY JUST MADE BAD BUSINESS DECISIONS.
But since they are not actually a bank and are not regulated, the “bank’s” depositors are not protected under the law.
At one point Voyager was, apparently, telling people that their deposits were protected by the government. The gov sent them a cease and desist letter.
The question now is what happens to their deposits. There are both cash and crypto deposits, but in the world of bankruptcy those belong NOT TO YOU, but to the “Creditors”.
In fairness, each customer was also a creditor, meaning there were tens of thousands or maybe hundreds of thousands of creditors. That makes this a very complex bankruptcy case.
Right now, people who had money stored at Voyager Digital are waiting. The do not have access to their money.
The company claims, and I use that word with some concern, that people who had dollars stored with the company will get them back “after a reconciliation”. Whatever that means.
Remember, at this point, all of the company’s assets are controlled by the bankruptcy court.
The company continues to operate at some level as it tries to pick up the pieces.
Lets be optimistic and assume that people who have dollars in their accounts get their money back. What happens to the people who have cryptocurrency in their accounts? They are considered UNSECURED creditors, which means that they are way down the food chain when it comes to getting paid.
Right now, Voyager says that these people will get some worthless stock (my words) and some made up tokens that they are creating.
All the time, trying to make peace with their big investors like Google and Alameda Research.
And of course, some bankruptcy court needs to make sense of all of this.
This will likely take years.
In the meantime, people who had money and crypto in Voyager Digital are both out of luck and have no certainty that they will get anything of value.
One more time – and I keep telling people – Invest only your lunch money, not your rent money. This is only the beginning as the crypto market tries to figure out what it is going to be when it grows up. There is going to be a lot more of this over the next few years. Credit: Investor Place
