Cryptocurrency firm Voyager Digital has received approval from the US bankruptcy court in New York to return $270 million in cash to its customers, The Wall Street Journal (WSJ) reported.
Customers should be allowed access to a custodial account held at the Metropolitan Commercial Bank, the Voyager bankruptcy judge’s ruling said, according to the report.
As PYMNTS reported on July 6, Voyager, a crypto lender, filed for Chapter 11 bankruptcy protection on July 5, telling the bankruptcy court for the Southern District of New York that it was “facing a short-term ‘race to the bank'” after a borrower defaulted on a $650 million loan.
Read more: Reckless crypto lending and opaque operations paved the way for Voyager Digital’s bankruptcy
The filing mentioned the inability of crypto hedge fund Three Arrows Capital – itself bankrupt – to repay its debt as well as the broader cryptocurrency market crash.
While the filing showed liabilities of $5.7 billion at the end of March, Voyager told the court that it had $1.3 billion in crypto assets on its platform and 350 million in the bank where he held customer deposits, as well as $110 million in cash and crypto assets of his own.
The Federal Deposit Insurance Corporation (FDIC) issued Voyager a stern warning on July 28 to stop “making false or misleading statements” implying that its clients’ funds are FDIC insured.
See more : FDIC Warning to Voyager Highlights Broader Crypto Insurance Concerns
An immediate concern alleged by the FDIC and the Federal Reserve Board was that the company had “stated or suggested on its website, mobile app, and social media accounts that Voyager itself is FDIC insured; customers who have invested with the Voyager cryptocurrency platform would benefit from FDIC insurance coverage… [and that] the FDIC would insure customers against the failure of Voyager itself.
We are always looking for partnership opportunities with innovators and disruptors.