32,000 Voyager customers may be on the hook for bankruptcy clawbacks

Voyager’s former Chief Innovation Officer Shingo Lavine warned that the platform could enact customer clawbacks under Chapter 11 bankruptcy rules – potentially affecting 32,000 users.

Lavine, who has since co-founded Ethos, suggested affected parties form a community group, as Celsius customers have, to oppose these actions under a unified voice.

“With Voyager likely going after retail clawbacks, it may be worth organizing the community similar to @celsius around fighting them.”

Such an organization already exists in the Unsecured Creditors Committee (UCC). Still, according to a snippet shared by @ETHJuiced, who first raised the issue, the UCC is aware of the “avoidance actions” and has not moved to counter the action.

“However, Binance U.S. has agreed to carve out approximately 32,000 parties subject to potential avoidance actions that were identified by the Committee.”

As such, Lavine likely meant an alternative community group that focuses on the users’  best interests.

Chapter 11 avoidance actions

Voyager filed for Chapter 11 bankruptcy on July 5, 2022, during a period of extreme price volatility and a spate of similar actions from rival platforms.

A deal was struck with Binance U.S. to acquire the company’s assets for $1.022 billion on Dec. 19, 2022. The press release stated Binance U.S.’s offer was the highest on the table, and a “clear path” was now open to returning locked customers’ funds.

Trustees seek to enact “avoidance actions” under Chapter 11 rules to maximize the pot for redistribution to creditors, with Binance U.S. apparently on board with the plan.

This means Voyager customers who withdrew funds between April 6, 2022, and July 5, 2022, 90 days before the firm filed bankruptcy, may be forced to return those funds.

According to Babi Legal Group, under Chapter 11 rules, the clawback process is about “seeking fairness” for all affected parties.

“This clawback allows the trustee to recoup assets that should have been part of the debtor’s bankruptcy estate but were eliminated or hidden from the trustee by fraudulent transfers or preferential transfers.”

Voyager customers livid

One commentator pointed out a critical flaw in the clawback process related to withdrawing funds within the affected period, then paying those funds back to Voyager.

“Say I withdrew $1000 , and then put it back in all within the 90 days ? They’ll be able to claw back the $1000 even tho it’s back inside Voyager ? That’ll be a really sh*tty situation.”

Another said Voyager customers who withdrew funds before the company filed for bankruptcy “did nothing wrong.”

Voyager customers withdrawing funds before the Terra Luna crash on May 7, 2022, would have done so in good faith without awareness of market stress potentially affecting the platform.

Lavine said the clawback was yet to be confirmed, “but recent information suggest[s] they intend to pursue.”