Voyager Stock Surges 40% on Approval to Return $270M to Customers

Judge Wiles, overseeing Voyager’s bankruptcy proceedings, said the firm had provided a “sufficient basis” in its bid to make customers whole.


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key takeaways

  • A US court has ruled Voyager can return hundreds of millions of dollars to its customers
  • Voyager’s OTC share price rose more than 40% while its native token VGX jumped up to 14%

A US bankruptcy court has granted crypto lender Voyager Digital approval to return $270 million to its customers, driving the embattled firm’s OTC share price higher on the day.

According to a report by the Wall Street Journal on Thursday, Judge Michael Wiles, overseeing Voyager’s bankruptcy proceedings, said the company had provided a “sufficient basis” in its attempt to make its customers whole.

Customers will be allowed access to the custodial account held at the Metropolitan Commercial Bank where more than $350 million is believed to be held on behalf of the lender, per the report.

Voyager, a publicly-traded company listed on the Toronto Stock Exchange (TSX), has seen its share price on the OTC market (VYGVQ:US) plummet more than 48% since it filed for bankruptcy on July 6 from $0.27 to $0.14.

Voyager is facing a delisting from the TSX after the Investment Industry Regulatory Organization of Canada announced last month it would halt trading of its shares listed in Canada. Share prices on the TSX were halted at $0.33 on July 5.

The company’s shares listed over-the-counter jumped to life Thursday amid Judge Wiles’ ruling, rising more than 41% on the day from $0.085 to $0.14, providing insight into how investors are quantifying the lender’s developments.

Voyager’s native cryptocurrency, VGX, also jumped up to 14%, from around $0.344 to $0.393, but has since given up nearly half of those gains, now trading at $0.373, per CoinGecko data.

Voyager says there’s plenty better buyout offers than FTX’s

Voyager filed for chapter 11 bankruptcy last month shortly after freezing account withdrawals out of fear customers would simultaneously request their funds be transferred off the platform.

“The chapter 11 process provides an efficient and equitable mechanism to maximize recovery,” Voyager’s  CEO Stephen Ehrlich said in a statement at the time.

Voyager’s bankruptcy filing estimates it owes money to roughly 100,000 creditors, with debts totaling no more than $10 billion, which means the $270 million approved to be disbursed represents a small portion of funds owed.

The company has also run afoul with US insurance regulator, the FDIC, and the Federal Reserve Board, which have accused the lender of falsely marketing its deposit accounts as being FDIC–insured.

On July 22, crypto exchange FTX and West Realm Shires jointly offered to provide Voyager customers early-access liquidity by buying Voyager’s remaining digital assets and loans. The move offered customers a chance to open an account on FTX’s platform, providing them a way to claim a portion of their frozen funds.

Voyager later rebuffed FTX CEO Sam Bankman-Fried’s companies’ attempts to purchase the crypto lender’s assets calling it a “lowball bid dressed up as a white knight rescue.”

The company has since claimed to have received as many as 88 better buyout offers from other firms, and claims to be in serious talks with around 20 interested parties.

This article was updated at 3:48 pm ET with context throughout.

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