Some Voyager Creditors May Get Cash Back that is Held at Bank

Perkins Coie

Perkins Coie

The bankruptcy court in the Voyager case issued an order authorizing that funds held in two specific accounts (FBO accounts) at Metropolitan Commercial Bank, which are administered by Voyager, are held for the benefit of and belong to Voyager’s customers. As a result of this order, the bank and Voyager may honor customer requests for withdrawals of such cash as of the date Voyager filed for bankruptcy.

The court expressly stated that this order did not authorize any withdrawals of other cash or any withdrawals of any cryptocurrency, and that it does not authorize any efforts to rescind, recharacterize, fulfill, or reverse any cryptocurrency trades.

The court warned that this ruling is specific to the Voyager cases and the ruling is based on terms of contracts in effect between Voyager and its customers and between Voyager and the bank.

            Links to the bankruptcy court’s order and opinion are available here and here.

            Of particular note, the judge’s opinion noted the following:

One final word of caution: I am aware that the treatment of cash and cryptocurrency in this and similar cases is a subject of avid interest among investors and insolvency attorneys, and that similar issues may arise in other cases. These chapter 11 cases are somewhat unusual, in that the overwhelming percentage of claims are held by customers, with very few other creditors. As a result, there really were no parties before the Court who had any strong financial interests in disputing the relief sought with respect to the FBO accounts, or in presenting any competing arguments or facts as to how the funds in the FBO accounts should be treated. Other courts who may be presented with similar issues therefore should understand, not only that my decision in this case is based on the particular agreements that have been presented to the Court, but also that my decision has been rendered without the kind of vigorous opposition by competing creditors that may be present in other cases. This decision is not intended to be a ruling as to the rights that customers might have in cryptocurrency cases generally, or as a ruling on any issues that competing creditors might raise in other cases.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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