Judge Michael Wiles of the U.S. Bankruptcy Court in New York, who is overseeing Voyager’s bankruptcy, ruled on Thursday that the company provided “sufficient basis” to support its contention that customers should be allowed access to the custodial account held at Metropolitan Commercial Bank. Voyager had about $270 million in the account when it filed for bankruptcy, the bank has said.
The chapter 11 filings of Voyager and nonbank lender Celsius Network LLC have tied up the holdings of their customers, who are realizing how little control they have over their funds and that they aren’t likely to recover in full through bankruptcy court.
Voyager sought bankruptcy protection a month ago after facing a “run on the bank” as customers flooded the firm with requests to withdraw their deposits triggered by the sharp drops in cryptocurrency prices of recent months.
In recent weeks, Voyager has asked for the bankruptcy court’s permission to honor customer withdrawal requests for cash funds held in custody at New York-based Metropolitan Commercial Bank, but it said the roughly $1.3 billion in digital assets on Voyager’s platform belongs to the bankruptcy estate that will be shared by all creditors, with the distribution to be decided through the bankruptcy proceeding.
The company said it is aiming to wrap up a sale process in September. Billionaire Sam Bankman -Fried’s FTX Trading Ltd. in July made an offer to buy some of Voyager’s crypto assets and allow Voyager customers a chance to use the money to open accounts on the FTX platform.
Joshua Sussberg, Voyager’s lawyer, told the court on Thursday that FTX’s offer is the lowest among several proposals, and that it is in talks with FTX to get to a higher offer.