Voyager Victim Calls for Trustee to Seize Control of the Estate

A creditor filed the 120-page document, requesting the appointment of a chapter 11 trustee due to alleged fraud and incompetence at Voyager.

A Voyager creditor and finance lawyer wants a chapter 11 trustee appointed in the bankruptcy proceedings of crypto brokerage Voyager Digital, which would result in Voyager losing control of its estate.

Michelle DiVita, a Voyager creditor, accused the company of having a “history of financial statement mistakes and public misrepresentations that were known, or reasonably discoverable, at the outset of the bankruptcy action” in a Feb. 1 motion.

DiVita feels that an examiner or trustee should have been appointed because of this pre-bankruptcy behavior, and she is now requesting one herself.

According to the complaint, Voyager “hid the real nature of its lending activities by releasing financial reports that grossly overstated its loan holdings by more than USD 1 billion.”

Shigo Lavine, a former director and CIO at Voyager, emphasized some of the significant allegations in the petition in a long Feb. 1 Twitter thread.

Voyager, for example, reportedly underreported a loan to crypto hedge fund Three Arrows Capital by $609 million and devalued Bitcoin in its financial records by 546% to minimize the extent of its loans.

According to the petition, Coinbase became aware of Voyager’s “financial reporting irregularities” and reportedly pulled out of a prospective contract to buy Voyager’s assets after discovering that “the financials don’t line up.”

A United States Trustee is already involved in the bankruptcy proceedings and is obligated to file a request to appoint a chapter 11 trustee when there are “reasonable grounds to suspect” that the debtor “participated in real fraud, dishonesty, or criminal activity.”

While the U.S. Trustee, among other things, establishes a creditors committee and analyses petitions for professional recompensation, they may also employ a bankruptcy trustee to handle the debtor’s affairs if the debtors are not authorized to do so themselves.

Cointelegraph reached out to Voyager for comment on the charges and motion but did not get a quick response.

In other events, Voyager and its creditors have resisted an insolvent trading firm Alameda Research’s attempt to recoup $446 million in loan repayments.

After filing for Chapter 11 bankruptcy on July 5, Voyager sought payback of all outstanding debts to Alameda and was fully reimbursed.

In a court filing on Jan. 30, Alameda tried to collect the monies, claiming that because they returned the loans within 90 days of filing for chapter 11 bankruptcy, they could “claw back” the funds for the benefit of Alameda creditors.

Voyager claims that its creditors have suffered a “significant loss” due to Alameda’s bid for Voyager’s assets, which it could not meet, costing them more than $100 million. Voyager contends that this places Alameda’s claim below that of its other creditors.