Texas Authorities Object to Voyager Digital’s Bankruptcy Disclosure Statement

Texas SSB and DOB Raise Concerns Over Voyager’s Valuation Methodologies

The Texas State Securities Board (SSB) and the Texas Department of Banking (DOB) have officially objected to Voyager Digital’s disclosure statement in court, raising questions regarding the methodologies and calculations used to estimate the fair market value of the bankrupt exchange’s crypto assets. This development comes as Voyager pursues a Chapter 11 bankruptcy case filed in July 2022, intending to propose a recovery plan for its investors.

Issues with the Disclosure Statement

In a pleading submitted to the United States Bankruptcy Court for the Southern District of New York, attorneys representing the SSB and DOB articulated their concerns about Voyager’s assertion that creditors might receive a 70% return. The authorities argued that the disclosure statement was inadequate, particularly lacking clarity on the methods used to derive average coin prices. They stated:

The Debtors (Voyager) have never been licensed by the SSB or the DOB and face very large fines and penalties for operating without a license. FTX is also not licensed to do business in the State of Texas.

Comparison with FTX

Furthermore, the Texas officials pointed out that FTX offers a product similar to Voyager’s Earn Program, which has been subjected to cease-and-desist orders in various states. This raised flags about the legitimacy of Voyager’s operations and the protection of investor interests.

Call for Transparency and Accountability

The SSB and DOB are insisting on a denial of Voyager’s disclosure statement in its current form. They demand that the company provide a clear outline of the methodologies and calculations that informed its assessments of fair market value, which is critical for transparency in determining potential funds recovery for creditors.

Recent Developments in the Voyager Case

On October 5, it was reported that FTX US emerged with the winning bid for Voyager’s assets, which encompasses an estimated fair market value of approximately $1.3 billion at an unspecified future date, alongside $111 million in “incremental value.” A hearing concerning this case is scheduled for October 19, indicating that developments are progressing rapidly.

Context: Surrounding Issues in the Crypto Lending Space

Coinciding with Voyager’s issues, other companies in the crypto lending space have also encountered regulatory scrutiny. Recently, the SSB, DOB, and the Vermont Department of Financial Regulation raised objections to Celsius’ plans to liquidate its stablecoin assets, citing potential violations of state laws that could allow the firm to operate again unlawfully. Celsius has sought permission from the Bankruptcy Court to sell off stablecoins, valued at around $23 million.

Conclusion

As Voyager Digital navigates its bankruptcy proceedings, the objections raised by Texas regulatory bodies highlight the ongoing concerns regarding investor protection, valuation practices, and regulatory compliance in the crypto industry. Stakeholders are watching closely to see the developments unfold and how they will impact the broader cryptocurrency and lending landscape.