Voyager Digital Hit by Hack as Withdrawals Commence

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  • Voyager Digital may have been hacked during the reopening of its platform for asset recovery
  • Despite successful withdrawals of approximately $490 million worth of assets by customers, the reopening also exposed users to scams targeting their digital wallets
  • The bankruptcy case has been marked by setbacks, including failed buyouts and a lawsuit, with Voyager only having $630 million to fulfill $1.8 billion in account claims.

Voyager Digital may have experienced a hack just as it reopened its platform to enable customers to recover their assets in the latest blow to creditors. The potential breach has been reported to law enforcement agencies and is currently under investigation by bankruptcy officials, with the breach apparently taking place right as the court-supervised liquidation process begins. This is just the latest setback of several that Voyager creditors and the bankruptcy team have had to endure following two failed buyouts and a lawsuit from Alameda Research.

$490 Million Withdrawn by Users

Voyager had reopened its crypto platform for a 30-day period, allowing customers to withdraw their remaining assets after months of court-supervised fundraising efforts to repay customers and other creditors. During this period, approximately $490 million worth of assets, close to 80% of the available amount, were successfully withdrawn by customers, as revealed by lawyer Darren Azman during a brief court hearing in Manhattan.

However, the reopening also exposed customers to various scams aimed at gaining access to their digital wallets, according to Azman. In these scams, fraudsters set up fake websites, enticing Voyager customers to link their non-Voyager crypto wallets to new accounts with promises of increased payouts. Once the new accounts are created, the non-Voyager wallets are emptied, leaving some unfortunate victims.

Judge Wiles, overseeing the bankruptcy case, expressed his disappointment during the hearing, stating, “It’s disgraceful. I don’t know what to say. After everything these folks have been through.” Indeed, Voyager is entering liquidation after failed buyouts from FTX and Binance.US, both of which looked to have given Voyager creditors a decent payout, and after a $445 million lawsuit filed against it by Alameda Research.

Failed Buyouts Complicated the Process

Voyager Digital Holdings Inc. was the first of several bankrupt crypto firms to initiate the process of returning money to creditors and customers. The company’s attempt to recover customer funds was further complicated by Binance.US’s termination of a deal to purchase the crypto platform in April, reducing the potential recovery amount for customers.

Court documents at the time of Voyager’s collapse showed that Voyager only had about $630 million to fulfill account claims totaling $1.8 billion.