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Mark Cuban Slammed with Lawsuit for Endorsing Bankrupt Voyager Digital

by Blockchain NewsAugust 12, 2022

Days after going tough on metaverse real estate, Mark Cuban, the billionaire owner of the basketball team Dallas Mavericks, has been slammed with a class action lawsuit for his role in promoting the bankrupt crypto platform Voyager Digital.

The class action suit was filed by the Moskowitz Law Firm in the United States District Court in Southern Florida and is demanding that Cuban, alongside Voyager Digital’s CEO, Stephen Erlich, and Dallas Mavericks pay back those who have suffered losses through the platform whom it said its products were paraded as a Ponzi scheme.

The lawsuit alleges that the business model of Voyager Digital was hinged on frequent promotions from Mark Cuban.

“Cuban and Ehrlich, went to great lengths to use their experience as investors to dupe millions of Americans into investing—in many cases, their life savings—into the Deceptive Voyager Platform and purchasing Voyager Earn Program Accounts (‘EPAs’), which are unregistered securities,” the lawsuit alleges.

He is known as one of the first Wall Street veterans to embrace digital currencies, and he is particularly known as a lover of Bitcoin (BTC) and Dogecoin (DOGE), a tag he competes with Elon Musk for. He took his advocacy to Voyager Digital, and per the lawsuit;

“Voyager Platform relied on Cuban’s and the Dallas Maverick’s vocal support and Cuban’s monetary investment in order to continue to sustain itself until its implosion and Voyager’s subsequent bankruptcy.”

Voyager Digital declared bankruptcy after halting withdrawals on its platform, a situation highlighting its disrupted business opportunity with the inability of Three Arrows Capital (3AC) to pay as much as $670 million it owed the company.

Considering its current woes, it is unclear how well the company will fare with this new lawsuit. Still, it is very focused on bringing succour to some of its customers, which is now necessary since the firm’s representatives advised against accepting the offer from FTX and Alameda Research.

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Mark Cuban Slammed with Lawsuit for Shilling Voyager Digital

by Blockchain NewsAugust 12, 2022

The lawsuit alleges that the business model of Voyager Digital was hinged on frequent promotions from Mark Cuban.

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Tagged : 3Ac / Bankruptcy / Legal / Mark Cuban / Voyager Digital

Voyager Digital Likely to Resume Withdrawal From August 11

by Blockchain NewsAugust 6, 2022

Earlier on Thursday, Judge Michael Wiles of the U.S. Bankruptcy Court in New York ruled in the favor of Voyager Digital, to receive access to the funds in its custodial wallets to return the $270 million to the affected customers.

Following the ruling, the bankrupt crypto lender has announced that customers with U.S dollars in their accounts can withdraw up to the tune of $100,000 in a 24-hour period.

This process will start exactly one week after the Judge’s ruling and that will be Thursday 11th August.

Although, this reimbursement scheme is highly dependent on if the payment from the Metropolitan Commercial Bank pulls through between 5-10 working days. Once the process is completed, the crypto broker will immediately resume access to in-app cash withdrawals.

Voyager Is Still Restructuring Amidst Bankruptcy

Voyager Digital Holdings suspended withdrawal, deposits, and many other trade offerings on its platform almost a month ago due to the heat of the harsh market condition. The lender’s alleged exposure to Three Arrows Capital (3AC), another troubled crypto lender which faced liquidation, was part of the problems Voyager encountered.

Eventually, Voyager applied for a Chapter 11 bankruptcy with the US Bankruptcy Court of the Southern District of New York.

The bankruptcy request was to allow the beleaguered crypto lender to put up a restructuring plan. Voyager planned to combine the $110 million in cash and owned crypto assets it had at hand with the funds in its For Benefit of customers (FBO) custodial account at Metropolitan Commercial Bank.

On the other hand, Shingo Lavine and his father, Adam Lavine ex-executives at Voyager, both had other plans. They proposed that the crypto lender suspends all its lending activities and instead resume live trades. Thereafter, issue a recovery token to customers to retain them on the platform.

From today’s news, it appears Voyager is keen on sticking to its initial restructuring plans.

While seeking means to settle its clients and investors, Voyager is also considering transferring its ownership in the future. Earlier, Voyager had filed a rejection letter in response to Alameda’s offer to buy out all of its digital assets including the outstanding loans.

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Tagged : BANKRUPTCY CASE / Legal / Three Arrows Capital / Voyager Digital

Ex-Voyager Executives Suggest Live Trading as Restructuring Plan

by Blockchain NewsAugust 1, 2022

Shingo Lavine and his father, Adam Lavine, both equity holders in Voyager and developers of Ethos, a leading cryptocurrency technology company, have proposed a restructuring plan to the troubled U.S. crypto lender.

Lavine’s restructuring proposal filed last week suggests that Voyager suspends all its lending activities and focuses on conducting live trading.

Three years ago, Voyager acquired the assets of crypto tech firm Ethos at about $4 million. This made Shingo Lavine the Chief Innovation Officer at Voyager while he was still a member of the company’s Board of Directors. Shortly after, he left Voyager due to certain disagreements with the company’s direction.

In the turmoil of the current crypto winter, Voyager Digital filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court of the Southern District of New York. This afforded it the right to come up with an efficient restructuring plan which will create a path to resume account access and return value to customers while reimbursing them.

Voyager’s Initial Restructuring Proposal

Not cast on stones, the initial restructuring plan was to give customers with crypto in their accounts an assortment of proceeds from the loan owed by Three Arrows Capital (3AC), shares in the newly restructured company, and Voyager tokens. This is in addition to the crypto already in their accounts.

3AC currently owes the crypto assets lender over $650 million in cryptocurrency. Breaking it down further, the previously undisclosed loan is 15,250 Bitcoin (BTC) and $350 million USDC. At hand, Voyager has over $110 million as cash and owned crypto assets. It still has $350 million in its For Benefit of Customers (FBO) account at Metropolitan Commercial Bank.

Voyager has over $1.3 billion in crypto assets on its platform. Although, some of it was planned to be used as liquidity for the day-to-day running of the platform while the restructuring takes place. Not yet to be concluded, but the Lavines’ new 8-step proposal is a shift from these initial plans.

The father and son wish their new firm Emerald would become a pivotal collaborator with Voyager in the restructuring process. The bottom line of their plan is to integrate live trading and issue a recovery token to customers to retain them on the platform.

A snippet of the plan sought to “provide major additional upside to unsecured creditors and incentivize customer retention through a ‘recovery token’ in addition to VGX Tokens. Give everyone a shot at full, or even above 100%+ recovery.”

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Tagged : 3Ac / Bankruptcy / Enterprise / RESTRUCTION / Voyager Digital

FTX’s Sam Bankman-Fried Justifies Firm’s Offer to Voyager Digital

by Blockchain NewsJuly 26, 2022

Sam Bankman-Fried, the co-founder and Chief Executive Officer of FTX Derivatives Exchange, justified the bid the trading platform and its subsidiary Alameda Ventures extended to bailout Voyager Digital.

Late last week, the joint offer extended from FTX and Alameda revealed that the duo was willing to permit Voyager digital’s customers to withdraw 75% of funds locked on the bankrupt firm’s platform. Per the terms of the offer, the remaining 25% can be drawn out via the liquidation process when the $650 million debt from Three Arrows Capital (3AC) is fully recovered.

Voyager’s lawyers have faulted the deal, saying it is a “low-ball bid dressed up as a white knight rescue” that only benefits FTX. The consultants working with Voyager Digital accused FTX of cherrypicking liabilities to assume and that the deal “transfers significant value to AlamedaFTX, and eliminates the value of assets that are of no interest to AlamedaFTX.”

In defence, Bankman-Fried said he does not wish that Voyager Digital’s customers suffer much more as funds locked in a bankruptcy process may not be accessible over a long period of time. He referenced the MtGox liquidation, a process launched to repay affected platform users, which is still ongoing till today.

Bankman-Fried said that while the deal is not perfect, the major antagonists are the so-called “third parties” that would lose from the whole transaction. He said the third parties would have preferred the bankruptcy process where they would be able to take consulting fees from the locked funds, which also contributes to its devaluation.

Just as it signed a deal with BlockFi in a bid to bail out the distressed crypto lender, Bankman-Fried said FTX has made its offer to Voyager Digital and hopes the firm’s “customers are allowed to choose it if they want.

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Tagged : ALAMEDA VENTURES / Blockfi / Exchanges / FTX / Sam Bankman-Fried / Voyager Digital

FTX’s Sam Bankman-Fried Justifies the Firm’s Offer to Voyager Digital

by Blockchain NewsJuly 26, 2022

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Tagged : ALAMEDA VENTURES / Blockfi / Exchanges / FTX / Sam Bankman-Fried / Voyager Digital

FTX Proposes Joint Proposal to Bailout Bankrupt Voyager’s Customers

by Blockchain NewsJuly 23, 2022

FTX crypto exchange announced on Friday that its plans to give Voyager Digital’s customers access to some of their funds.

According to a joint proposal between FTX and Alameda Ventures, a trading firm founded by Bankman-Fried, Voyager customers will be able to claim a part of their funds that were frozen more than three weeks ago. It is, however, unclear how much each customer will be able to receive.

As per the joint plan, Alameda Ventures will buy all of Voyager’s digital assets and digital asset loans, except Voyager’s loans to the bankrupt crypto hedge fund Three Arrows Capital.

Voyager’s clients could then get some of their funds if they open an account with FTX. Such customers could either make withdrawals of their cash balance immediately or use the funds to buy digital assets on FTX‘s platform, FTX said.

Customers are expected to participate voluntarily, the company added.

FTX expects to close the deal in early August, subject to the requirements of the Chapter 11 process and the need for court approval.

In a statement on Friday, Sam Bankman-Fried, said: “Voyager’s customers did not choose to be bankruptcy investors holding unsecured claims. The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business – a way that allows customers to obtain early liquidity and reclaim a portion of their assets without forcing them to speculate on bankruptcy outcomes and take one-sided risks.”

As per the joint proposal, FTX would not buy Voyager’s loans to Three Arrows Capital or others under litigation claims. The joint proposal expects Voyager to pursue its rights with regards to Three Arrows Capital matters and use any recoveries to supplement fund distributions to customers, whether or not such clients open accounts with FTX.

Helping Failing Crypto Firms

The joint proposal comes two weeks after Voyager filed for Chapter 11 bankruptcy less than a week after suspending trading and withdrawals due to the current crypto market crash.

The move comes days after the company issued a default notice to the bankrupt hedge fund firm Three Arrows Capital (3AC) for failure to make required payments on a loan.

Many recent problems within the crypto industry can be traced back to the spectacular collapse of TerraUSD stablecoin in May. And contagion spread across risky crypto projects. Crypto firms like Celsius, BlockFi, Voyager capital, and Three Arrows Capital (3AC), among others, became exposed to insolvency fears

Late last month, Sam Bankman-Fried announced that they had given some crypto firms who suffered due to 3AC liquidation a line of credit worth $750 million. FTX offered a bailout worth $750 million to keep two crypto lenders solvent: $500 million for Voyager and $250 million for BlockFi.

On June 22, Voyager signed an agreement with Alameda Ventures for a revolving line of credit and gaining access to additional capital to meet its customers’ liquidity needs.

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Tagged : Bailout / Exchanges / FTX / JOINT PROPOSAL / Voyager Digital

Voyager Digital Asks Court to Allow Withdrawals Request

by Blockchain NewsJuly 18, 2022

Embattled crypto brokerage firm Voyager Digital recently sought permission to process user withdrawals from the Federal Bankruptcy Court.

According to a recent court filing, Voyager is requesting a permit from the court to approve users’ withdrawal requests. The amount is in excess of $350 million. The funds are in a For Benefit of Customers (FBO) account with New York’s Metropolitan Commercial Bank.

The firm is trailing this line to lessen customers’ worry and restore investors’ confidence. According to the firm, “failure to honour customer withdrawals any longer could materially harm customer morale.”

Recall that, on July 4, Voyager Digital halted withdrawals on its platform due to the market downturn. The firm said at the time that the move would allow it time to explore possible options to scale the difficulties brought about by the current bearish run.

Shortly after, the troubled firm filed for chapter 11 bankruptcy protection to preserve its assets and maximize customers’ value.

The struggling firm says it has $1.3 billion in crypto assets on its platform and also holds over $350 in an FBO account with Metropolitan Commercial Bank.

In addition to this, Voyager says it has claims in excess of $650 million with Singaporean-based Three Arrows Capital.

Along with its request for permission to honour withdrawals, Voyager is also asking for approval to proceed with its other financial services. These include liquidating user accounts with negative balances and also liquidating sweep cash with third-party exchanges.

Furthermore, it wants to carry out ordinary course reconciliation on the user accounts and also continue its crypto staking services.

With customers’ funds still trapped, the crypto community awaits the court’s ruling on the issue. The court has fixed August 4, 2022, at 11.00 am E.T. for the hearing.

The prolonged bearish market continues to affect players’ fortunes in the nascent industry adversely.

Collapsed crypto lender Three Arrows Capital also recently filed a chapter 15 bankruptcy in the U.S. after a British Virgin Islands court ruled that the firm should be liquidated. Other crypto lenders like Celsius, Vauld, and Babel Finance have also paused withdrawals on their platforms.

Several firms, including Coinbase, Gemini, and BlockFi have reduced headcount in order to remain operational.

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Tagged : 3Ac / Bankruptcy / Legal / Voyager Digital

Voyager Digital Executives Threatened by Clients, Revealed in Bankruptcy Hearing

by Blockchain NewsJuly 11, 2022

Senior executives of crypto broker Voyager Digital and their families were reportedly threatened by their clients, a court in Manhattan revealed last Friday.

At the first-ever bankruptcy hearing for Voyager Digital took place before U.S. Bankruptcy Judge Michael Wiles in Manhattan last Friday, the company’s attorney, Christopher Marcus of Kirkland & Ellis said the firm’s executives and their families were threatened by customers when their accounts were frozen.

Marcus highlighted how inevitable it is for Voyager Digital to file for bankruptcy, a move it did as soon as it was able to. At the time when the firm filed the bankruptcy claim, it said there were as many as 3.5 million active users holding as much as $5.9 billion in assets. With the liquidity pressures the firm was facing as well as the current losses it is experiencing from the ordered liquidation of Three Arrows (3AC), its business continuity was notably hampered.

Amidst the escalating personal threats Voyager Digital’s executives are receiving, Marcus said the restructuring approach is to show users that there is still hope.

“We are focused on a path forward,” Marcus said. “It is not correct to think that there is no hope.”

Experts have noted that the Chapter 11 bankruptcy is the best for Voyager Digital as a broker-dealer liquidation would completely halt Voyager’s operations and result in a lot of expensive litigation that would benefit no one according to Josh Sussberg of Kirkland.

Voyager Digital is not alone as there have been reports that LUNA coin holders also threatened Do Kwon when the coin shed as much as 99.9% of its value back in May. Kwon has moved from South Korea and is now resident in Singapore following the event.

The spate of liquidations in the digital currency ecosystem is now very alarming, and the credit extension from Alameda Ventures was unable to save Voyager Digital. Three Arrows Capital has also filed for Chapter 15 Bankruptcy in the US while another struggling firm, Celsius Network is resisting the urge to file for bankruptcy on its lawyer’s recommendation.

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Tagged : Bankruptcy / Legal / Voyager Digital

Voyager Digital Suspends Crypto Trading, Deposits, And Withdrawals

by Blockchain NewsJuly 4, 2022

Voyager Digital, a cryptocurrency brokerage firm, announced last Friday that it has suspended all customer trading, deposits, withdrawals and loyalty rewards.

“This was a tremendously difficult decision, but we believe it is the right one given current market conditions. This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together. We will provide additional information at the appropriate time,” said Stephen Ehrlich, CEO of lending firm Voyager Digital.

Voyager has been facing financial challenges that have adversely affected its operations. On June 22, the lending firm revealed that it had huge exposure to the crypto hedge fund firm Three Arrows Capital (3AC). Last week, Voyager issued a notice of default to the struggling crypto hedge fund for failure to repay its loans.

The loans totalled about $665 million, consisting of 15,250 BTC ($294 million) and $350 million in USDC. Voyager said that it had requested Three Arrows Capital to repay $25 million in USDC by June 24, and repay the entire balance of USDC and BTC by June 27.

Since 3AC defaulted, Voyager recently disclosed plans to pursue all means to recover its funds from the crypto hedge fund firm, including through a court-ordered liquidation process in the British Virgin Islands.

Voyager recently secured over $500 million loans in form of $200 million in USDC and $294 million worth 15,000 BTC from Alameda Research, a quantitative trading firm owned by FTX boss Sam Bankman-Fried, to mitigate its $665 million exposure and weather the crypto winter.

So far, Voyager has received access to the $75 million part of the FTX loan, but it seems that was not enough to keep its business operating as usual. The firm looks forward to accessing more funds whenever available.

The Fragile Crypto Market

The ongoing crash of cryptocurrencies has left several market players in the industry facing financial difficulties.

Bitcoin and altcoins have plunged hard as the market experiences new realities triggered by interest rate hikes by the Federal Reserve and the collapse of TerraUSD stablecoin and its sister cryptocurrency Luna.

On June 12, crypto lender Celsius suspended all account withdrawals, citing “extreme market conditions.” Reports showed that Celsius invested hundreds of millions of dollars in the illiquid token derivative called Staked ether, or stETH, another controversial cryptocurrency that caused damage in the digital asset market, after the fall of TerraUSD.

A prominent crypto lending firm BlockFi also has been facing financial struggles as it had significant exposure to Three Arrows Capital. The crypto lender recently announced massive job cuts and its valuation dramatically reduced from $5 billion to $1 billion. Last week, BlockFi secured a $250 million revolving line of credit from FTX to bail out its business.

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Tagged : Brokerage / Cryptocurrency / Enterprise / LIQUIDITY / Voyager Digital