Empty hopes customers bankrupt Voyager Digital
2023.02.02 03:42
Empty hopes customers bankrupt Voyager Digital
By Tiffany Smith
Budrigannews.com – In the cryptocurrency brokerage Voyager Digital’s bankruptcy trial, a creditor and finance lawyer want a chapter 11 trustee appointed, which would result in Voyager losing control of its estate.
Michelle DiVita, a creditor of Voyager, accused the company of having a “history of financial statement inaccuracies and public misrepresentations that were known, or reasonably discoverable, at the beginning of the bankruptcy proceeding” in a motion she filed on February 1.
DiVita believes that an examiner or trustee should have been requested because of this behavior before the bankruptcy, and she is now doing so herself.
“Concealed the true nature of its lending activities by publishing financial reports that materially understated its loan positions by more than $1 billion USD,” according to the filing.
@investvoyager loans disclosed on March 31 financial report: $2.2B.
Actual loans on April 3: $3.1B
$1.1B concealed in one business day.
Releases are unconscionable @VoyagerUCC @DOJCrimDiv
In a lengthy Twitter conversation that took place on February 1, Shigo Lavine, a former director and CIO for Voyager, emphasized a few of the primary allegations made in the filing.
To minimize the size of its loans, Voyager allegedly undervalued Bitcoin (BTC) in its financial reports by 546 percent and underreported a loan to crypto hedge fund Three Arrows Capital by $609 million.
Regarding its capacity to raise capital and satisfy liquidity requirements, the Debtor offered assurances.
This led a lot of people, including myself, to the incorrect conclusion that Voyager would be able to survive despite 3AC’s collapse.
The filing says that cryptocurrency exchange Coinbase also heard about Voyager’s “financial reporting inconsistencies” and had reportedly pulled out of a deal to buy Voyager’s assets because “the financials don’t add up.”
A United States Trustee is already involved in the bankruptcy proceedings. When there are “reasonable grounds to suspect” that the debtor “participated in actual fraud, dishonesty, or criminal conduct,” the trustee must file a motion to appoint a chapter 11 trustee.
In addition to appointing a creditors committee and reviewing professional compensation applications, the U.S. Trustee may also employ a bankruptcy trustee to oversee the debtors’ affairs if they are unable to do so.
In other news, Alameda Research, a bankrupt trading company, attempted to recoup $446 million in loan repayments against Voyager and its creditors.
Voyager received full repayment of all outstanding loans to Alameda following the start of chapter 11 proceedings on July 5.
However, in a court filing on Jan. 30, Alameda argued that they could “claw back” the funds for the benefit of Alameda creditors because they had repaid the loans within 90 days of filing for chapter 11 bankruptcy themselves.
According to Voyager, Alameda’s bid for Voyager’s assets, which it was unable to honor, has caused “substantial harm” to the company’s creditors, costing them more than $100 million. According to Voyager, this places Alameda’s claim below those of its other creditors.
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