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July 17, 2022

Voyager urges court to honor MCB withdrawals

The embattled crypto brokerage Voyager Digital has urged the New York bankruptcy court to respect client withdrawals of more than $350 million held by Metropolitan Commercial Bank, according to a court filing on July 14.

Following Voyager’s bankruptcy filing, the company has filed for Chapter 11 protection. According to court documents, the corporation has $350 million in cash in the Metropolitan Commercial Banks For Benefit of Customers (FBO) account and $1.3 billion in crypto assets on its platform. To top it all off, the business has $650 million in claims against now-bankrupt crypto hedge fund Three Arrows Capital (3AC).

There is a risk to client satisfaction if the debtors refuse to satisfy withdrawal requests for an extended period of time during these Chapter 11 proceedings. Customer worries about the integrity of the platform and access to their money would be alleviated by allowing withdrawals, according to a filing by the bank.

Additionally, Voyager requested permission from the bankruptcy court to conduct additional procedures including selling clients’ crypto assets who have negative U.S. dollar balances in order to satisfy consumer withdrawals from the bank. At 11:00 a.m. EDT on August 4th, a court date has been set for the case.

It was a week before Voyager filed for bankruptcy protection that it had frozen users’ assets on its site. Unfavorable market circumstances and 3AC’s inability to repay their loan from the crypto hedge fund have pushed the crypto broker to the brink of bankruptcy.

Clients will get a mix of crypto assets, revenues from monies seized from 3AC, shares in the newly reformed business, and Voyager tokens, according to the brokerage firm if the petition is allowed by the court.

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In the meanwhile, Voyager isn’t the first cryptocurrency company to declare bankruptcy. It has also been reported that crypto lender Celsius Network filed for Chapter 11 bankruptcy protection in the Southern District of New York lately.