Sebastian Sinclair

<div id="highlights-block_62ec725abd857" class="highlights">
 <ul>
 <li>A US court has ruled Voyager can return hundreds of millions of dollars to its customers</li>
 <li>Voyager&#8217;s OTC share price rose more than 40% while its native token VGX jumped up to 14%</li>
 </ul>
 
</div>



A US bankruptcy court has granted crypto lender Voyager Digital approval to return $270 million to its customers, driving the embattled firm&#8217;s OTC share price higher on the day.



According to a report by the <a href="https://www.wsj.com/articles/voyager-digital-to-return-270-million-to-customers-11659648633" target="_blank" rel="noreferrer noopener">Wall Street Journal</a> on Thursday, Judge Michael Wiles, overseeing Voyager&#8217;s bankruptcy proceedings, said&nbsp;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&nbsp;listed on the Toronto Stock Exchange (TSX), has seen its share price on the <a href="https://www.bloomberg.com/quote/VYGVQ:US" target="_blank" rel="noreferrer noopener">OTC market</a> (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&#8217;s shares listed over-the-counter jumped to life Thursday amid Judge Wiles&#8217; ruling, rising more than 41% on the day from $0.085 to $0.14, providing insight into how investors are quantifying the lender&#8217;s developments.



Voyager&#8217;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.



<h3 class="wp-block-heading">Voyager says there&#8217;s plenty better buyout offers than FTX&#8217;s</h3>



Voyager filed for <a href="https://cms.blockworks.co/voyager-files-for-bankruptcy-days-after-freezing-withdrawals/" target="_blank" rel="noreferrer noopener">chapter 11 bankruptcy</a> 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&#8217;s &nbsp;CEO Stephen Ehrlich said in a&nbsp;<a href="https://www.investvoyager.com/pressreleases/voyager-digital-commences-financial-restructuring-process-to-maximize-value-for-all-stakeholders" target="_blank" rel="noreferrer noopener">statement</a> at the time. 



Voyager&#8217;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 <a href="https://cms.blockworks.co/fdic-slaps-bankrupt-lender-voyager-over-deposit-insurance-claims/" target="_blank" rel="noreferrer noopener">falsely marketing</a> its deposit accounts as being FDIC–insured.



On July 22, crypto exchange FTX and West Realm Shires jointly offered to provide Voyager customers <a href="https://cms.blockworks.co/ftx-offers-to-bail-out-voyager/" target="_blank" rel="noreferrer noopener">early-access liquidity</a> by buying Voyager’s remaining digital assets and loans. The move offered customers a chance to open an account on FTX&#8217;s platform, providing them a way to claim a portion of their frozen funds.



Voyager later rebuffed FTX CEO Sam Bankman-Fried&#8217;s companies&#8217; attempts to purchase the crypto lender’s assets calling it a “<a href="https://cms.blockworks.co/voyager-lawyers-clash-with-bankman-fried-over-low-ball-buyout-offer/" target="_blank" rel="noreferrer noopener">lowball bid dressed up as a white knight rescue</a>.&#8221; 



The company has since <a href="https://cases.stretto.com/public/x193/11753/CORRESPONDENCE/1175308042250000000003.pdf" target="_blank" rel="noreferrer noopener">claimed</a> 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.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

bankruptcy

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

<div id="highlights-block_621843749f993" class="highlights">
 <ul>
 <li>Investors responded favorably Thursday to the strong quarterly earnings, sending the company&#8217;s share price on the ASX to highs not seen in 22 days</li>
 <li>Over 43% of Block&#8217;s fourth quarter earnings came from its crypto peer-to-peer payment service Cash App of $518 million</li>
 </ul>
 
</div>



Shares of merchant payments company Block Inc. (SQ), formerly Square, rose more than 40% Thursday following a strong posting of fourth-quarter profits, partly bolstered by its crypto earnings.



The company announced it had generated gross profit of $1.18 billion for Q4, 2021 — a 47% year-over-year increase, according to its <a href="https://s29.q4cdn.com/628966176/files/doc_financials/2021/q4/4Q21-Shareholder-Letter_Block.pdf" target="_blank" rel="noreferrer noopener">letter to shareholders</a>. 



Of that, Block said its crypto peer-to-peer payment service Cash App generated a gross profit of around $518 million, up 37% year over year, while Square&#8217;s ecosystem generated a gross profit of $657 million.



Square offers small to medium businesses point-of-sales payment registers aimed at accepting credit card payments. Over the years, Block has edged its way into a sector typically dominated by large banks and financial institutions.



Block&#8217;s share price on the Australian Securities Exchange (ASX) rose to a 22-day high of AUD $165 ($118) per share from around AUD $116 ($83), the day prior following the strong posting. It etched out a 42% increase in share value at the peak of trading fervor before cooling slightly.



Shares were last seen changing hands for around AUD $152.50 ($109.38). Block&#8217;s main listing is via the New York Stock Exchange — which closed before its quarterly earnings went live — while its secondary listing is on the ASX.



Following <a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/" target="_blank" rel="noreferrer noopener">Square’s rebranding</a> to Block in December, the company announced in January it had purchased Australian &#8220;buy-now, pay-later&#8221; firm AfterPay as part of its <a href="https://cms.blockworks.co/jack-dorseys-block-to-list-on-australias-asx-in-first-major-crypto-listing-in-exchanges-history/" target="_blank" rel="noreferrer noopener">move to the ASX</a>. Profit from the fourth quarter did not include earnings from AfterPay.



Share prices had already begun to slump following that announcement in August but began to decline in earnest during a 50-day deterioration in prices from around US$252 per share on Nov. 4, 2021, to around US$133 by the time the acquisition was finalized. 



&#8220;We believe this acquisition will further Block’s strategic priorities for Square and Cash App by strengthening the connections between our ecosystems,&#8221; the company said in its letter. &#8220;Peer-to-peer payments have allowed us to virally grow Cash App’s network and remained the primary driver of customer acquisition in the fourth quarter.&#8221;



The company added that it had introduced a new feature allowing its customers to send fractional shares and bitcoin from their Cash App balances to friends and family in a bid to &#8220;enhance network effects&#8221; via other products.



&#8220;By expanding peer-to-peer capabilities, we see an opportunity to drive network effects across other products within our ecosystem and encourage customers to try new products within Cash App,&#8221; Block said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Shares

Newsletter

Blockworks Research