Bankrupt crypto firm Voyager Digital has received court approval to release $270 million in cash deposits, a significant development for creditors and customers affected by the company’s collapse. The ruling came from Judge Michael Wiles of the U.S. Bankruptcy Court in New York, allowing custodian bank Metropolitan Commercial Bank to distribute the funds it was holding when Voyager entered Chapter 11 proceedings.
Court Allows Custodied Cash to Be Released
The decision follows a turbulent period for Voyager. In late June, the company disclosed that hedge fund Three Arrows Capital owed it $655 million. On July 1, Voyager suspended trading, deposits, and withdrawals, citing difficult market conditions. Roughly a week later, it filed for bankruptcy protection, pointing to prolonged volatility and contagion across the crypto sector.
The $270 million approved for release represents cash held by Metropolitan Commercial Bank, not the full pool of customer assets tied to Voyager’s platform. A much larger question remains around crypto holdings on the exchange. Reports indicate Voyager had around 3.5 million customers and roughly $1.3 billion in crypto assets on the platform.
Regulatory Scrutiny Intensifies
The court action came after the Federal Deposit Insurance Corporation and the Federal Reserve ordered Voyager to remove statements suggesting that the company itself was FDIC insured. That regulatory push highlighted ongoing concerns over how crypto firms describe customer protections, especially when custody arrangements and deposit insurance are involved.
Voyager’s failure also unfolded amid a broader industry crisis. Three Arrows Capital filed for Chapter 15 bankruptcy protection, while crypto lender Celsius entered Chapter 11. The sequence of bankruptcies underscored how leverage, liquidity pressure, and counterparty exposure spread across the digital asset market during the 2022 downturn.
Stock Collapse and Executive Sales Draw Attention
Voyager’s market value has fallen sharply. Its shares once traded as high as $29.86 in April 2021, but were later changing hands at about $0.34. CNBC also reported that CEO Steven Ehrlich sold more than $30 million worth of Voyager stock in February and March 2021, a detail that has added to scrutiny around executive actions before the company’s decline.
Voyager was estimated to move through its bankruptcy process by the end of September 2022, but the eventual recovery outcome for customers will depend on how the remaining assets, claims, and restructuring efforts are handled in court.