A US bankruptcy court has granted approval for Voyager to return hundreds of millions of dollars to its customers
Voyager’s share price rose more than 41% on the day shortly before markets closed
The US Bankruptcy Court in the Southern District of New York has granted bankrupt crypto lender Voyager Digital approval to return $270 million back to its customers, driving the embattled firm’s 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 firm 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, which is a publicly-traded company listed on the Toronto Stock Exchange, has seen its share price (VYGVQ) plummet more than 48% since it filed for bankruptcy on July 6 from $0.27 to $0.14.
Though the company’s shares jumped to life Thursday amid Judge Wiles’ ruling rising more than 41% on the day from $0.085 to $0.14 before the closing bell, according to exchange data.
The lender 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.
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.”
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