Tag: crypto lender

Bankrupt Crypto Lender Voyager Digital Hopeful to Provide 35 Percent Customer Payout

Crypto lender Voyager Digital said Wednesday that customers will recover about 35 percent of their cryptocurrency deposits as the company winds down its operations after a failed buyout attempt by crypto exchange Binance.US.

US Bankruptcy Judge Michael Wiles approved Voyager’s proposed liquidation plan at a court hearing in Manhattan on Wednesday, allowing the company to return about $1.33 billion (nearly Rs. 11,000 crore) in crypto assets to customers and end its efforts to reorganize under Chapter 11.

Voyager filed for bankruptcy protection in July, citing volatility in cryptocurrency markets and a default on a large loan made to crypto hedge fund Three Arrows Capital (3AC).

Voyager suffered through two failed sale attempts during its bankruptcy. It initially sought to sell its assets for $1.42 billion (nearly Rs. 11,700 crore) to FTX, a deal that failed when FTX imploded in November. Binance.US stepped in with a $1.3 billion offer, but called off the deal on April 25, citing a “hostile and uncertain regulatory climate.”

Voyager customers’ recovery hopes are highly dependent on the outcome of litigation with FTX, which is seeking to claw back $445.8 million (nearly Rs. 3,670 crore) in loan repayments made to Voyager before FTX collapsed into bankruptcy.

If Voyager fully prevails in the FTX litigation, customers’ expected recovery would be 63.74 percent, according to Voyager’s court filings.

Voyager intends to repay customers with the same type of cryptocurrency that they had in their accounts. For deposits held in unsupported cryptocurrencies that cannot be withdrawn from Voyager’s platform and for Voyager’s proprietary VGX token, Voyager will instead repay customers using the stablecoin USDC.

Voyager was one of several crypto lenders to file for bankruptcy in 2022 after a boom in the COVID-19 pandemic. Others were Celsius Network, BlockFi, and Genesis Global Capital.

© Thomson Reuters 2023

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Hodlnaut Crypto Lender Under Scanner in Singapore, Being Probed for Fraud

Singapore has launched a probe into the Hodlnaut crypto lender to investigate its operations. The Commercial Affairs Department (CAD) from Singapore is now probing if Hodlnaut has been indulging in cheating and fraudulent activities. As per the law enforcement authorities, between August and November, several reports had claimed that Hodlnaut and its directors had made ‘false representations’ about the lender’s exposure to a particular digital token. The CAD is Singapore’s white-collar crime investigation unit.

The token in question remains unnamed. It reportedly refers to the USTC crypto token that was developed by Terra which collapsed quite dramatically earlier this year in May.

Following Terra’s collapse, Holdnaut had lost nearly $190 million (roughly Rs. 1,550 crore) that left its accounts high and dry.

In August, Hodlnaut had to freeze withdrawals from its platform to save its business from shutting down.

Holdnaut, as of now, has not reacted to the development.

The collapse of the Terra ecosystem — both algorithmic stablecoin UST and sister token LUNA — triggered a massive crypto sell-off leading to a crypto winter.

Terra’s collapse also prompted the high-profile meltdowns of crypto lenders Celsius and Voyager, as well as hedge fund Three Arrows Capital, and ushered even more scrutiny on crypto investing and stablecoins from regulators.

Shaktikanta Das, the governor of the Reserve Bank of India (RBI), had issued warnings against the experimenting in the crypto sector soon after Terra’s collapse.

“This [crypto] is something whose underlying [value] is nothing. There are big questions on how do you regulate it. Our position remains very clear, it will seriously undermine the monetary, financial, and macroeconomic stability of India,” the governor had said at the time.

In the market movements that followed the collapse of Terra and then FTX crypto exchange this month, over $200 billion (roughly Rs. 16,30,000 crore) were wiped off from the market, leaving the global crypto valuation currently at $828 billion (roughly Rs. 67,48,800 crore).

Several crypto companies including Lemon Cash, Genesis and Vauld had to lay off their employees to sustain their respective businesses.

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Crypto Lender BlockFi Pauses Withdrawals Amid FTX, Alameda Research Liquidity Crisis

Crypto lending firm BlockFi has announced that it was “not able to operate business as usual,” citing a lack of clarity regarding FTX, FTX.US, and Alameda Research as the reason. The leading cryptocurrency lending platform says that until there is clarity, it will be limiting activity including pausing withdrawals. It also requested that clients do not make deposits, though that would be highly unlikely given the current situation. BlockFi claimed that its priority was to protect its clients and their interests.

The company posted an update to its Twitter account indicating that it will halt services. “We are shocked and dismayed at the news regarding FTX and Alameda,” BlockFi wrote. “We, like the rest of the world, found out about this situation through Twitter.”

Over the past several days, a substantial portion of Alameda Research’s holdings was revealed to be tied to FTX’s FTT token rather than the traditional assets. That controversy led to a bank run on FTX. To gain funding and protect against further losses, FTX tried to arrange an acquisition with Binance that ultimately fell through.

The fallout from the failed deal has continued into Thursday as CEO Sam Bankman-Fried posted an admission of failure.

BlockFi indirectly referred to these events as the reason for its service suspension. “Given the lack of clarity of the status of FTX.com, FTX US, and Alameda Research, we are not able to operate business as usual,” it wrote.

The company said that though it will provide updates on the situation, those updates will be “less frequent than what our clients and other stakeholders are used to.”

BlockFi did not explicitly state whether it had financial exposure to FTX or its related companies. Earlier this week, BlockFi COO and co-founder Flori Marquez said that the company had a $400 million (roughly Rs. 3,200 crore) loan from FTX US rather than FTX. It is unclear whether BlockFi had other exposure.

Incidentally, the competing crypto lending firm Nexo said on Tuesday that it had narrowly avoided losses from FTX’s collapse. Nexo withdrew certain balances just prior to FTX’s collapse and is still operating as usual.

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