Key Takeaways:
- Voyager Digital’s disclosure statement was challenged in court by the Texas Department of Banking (DOB) and the Texas State Securities Board (SSB).
- Authorities claimed that Voyager, among other things, fails to explain the methodology used to determine the average coin prices.
Voyager Digital, the deceased crypto lender, has added to its list of troubles, as the exchange has fallen into difficulties yet again. This time, the Texas Department of Banking (DOB) and the Texas State Securities Board were engaged with Voyager Digital (SSB).
The SSB and DOB’s legal representatives opposed the decision approving the sufficiency of Voyager’s modified disclosure statement in a brief that was submitted to the United States Bankruptcy Court for the Southern District of New York.
In July 2022, Voyager Digital submitted a Chapter 11 bankruptcy petition in New York while also presenting an investor reorganisation proposal.
On June 22, the platform received a $500 million loan in cash and cryptocurrency from Sam Bankman-Alameda Fried’s Research. This loan was meant to replace money provided by Three Arrows Capital, which had defaulted on a $665 million loan. Despite several warnings, 3AC did not repay the loan, leaving Voyager unable to meet the liquidity needs of its customers.
The Texas state government said that Voyager’s disclosure statement, which claimed that creditors might receive a 70% return, is deficient because it doesn’t articulate how the average coin prices were determined.
The Debtors (Voyager) also risk extremely high fines and penalties for operating without a license because they have never received one from the SSB or the DOB. Additionally, FTX lacks a business license to operate in the State of Texas.
The present regulators urged that the bankruptcy court reject Voyager Digital’s disclosure statement until it has been properly revised. The insolvent exchange was also ordered by the SSB and the Texas DOB to provide the formula it used to determine the reasonable market value of its crypto assets.
On October 5, FTX US was able to secure the best bid for Voyager’s assets. Voyager claims that the proposal was made up of the fair market value of its cryptocurrency holdings at an unspecified future date, which is anticipated to be around $1.3 billion, plus $111 million in “incremental value.” The hearing date for the case has been set for October 19 at the time of writing.
Voyager Digital was granted permission by the New York Bankruptcy Court in August to restore $ 270 million in customer cash stored with Metropolitan Commercial Bank (MCB). Judge Michael Wiles, who is presiding over Voyager’s bankruptcy, stated that the cryptocurrency company’s argument that clients should be given access to the custodian account maintained at MCB had a “sufficient basis.”
