Millions of customers of crypto platforms Voyager Digital Holdings Inc. and Celsius Network LLC have been thrust into a potentially long and painful battle in bankruptcy trying to retrieve their money, WSJ Pro Bankruptcy reported. The chapter 11 filings of crypto brokerage Voyager and nonbank lender Celsius 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. Jess Archer, a 45-year-old single mom to two children, deposited $70,000, a sizable portion of her savings, with Voyager in May and June. She was drawn by the firm’s offer of a 9% interest rate, hoping the profit could help her make a down payment on a new house. When Voyager filed for bankruptcy, “I spent two days crying and blaming myself,” said Archer. Voyager has said that recoveries for customers can include a combination of crypto, shares in the reorganized company and maybe some tokens. It has also made it clear that the account holders will be “impaired,” an outcome that could include not getting all of their money back. Archer said that she believes it is unlikely that she will get anything back even though Voyager has received court approval to pay employees and professionals. While she still thinks crypto is a viable alternative to fiat currency like the U.S. dollar, her experience has led her to believe that more government oversight is needed so history doesn’t repeat itself. Joshua Sussberg, a lawyer who represents both Voyager and Celsius, said while the decision to halt trading services and freeze withdrawals was difficult for the companies, “it was necessary to preserve investments and ensure equal treatment of all customers.” But now the focus is to work with customers, through officially appointed committees of customers, to maximize value for them, he said. “All is not lost. On the contrary, it is our job to get customers as much value back as quickly as we can,” Sussberg said. In recent weeks, Voyager has asked for a bankruptcy court’s permission to honor customer withdrawal requests for some $350 million in cash funds held in custody at the 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.
