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A Voyager creditor and financial attorney wants to see a chapter 11 trustee appointed in the bankruptcy trial of crypto broker Voyager Digital, which would see Voyager lose control of his estate.
In a February 1 motion, Voyager creditor Michelle DiVita accused Voyager of having “a history of financial statement inaccuracies and public misrepresentations that were known, or could reasonably be discovered, early in the bankruptcy proceedings.”
Because of this pre-bankruptcy behavior, DiVita believes that the examiner or guardian should have been required, and now does so himself.
The filing alleges that Voyager “hides the true nature of its lending activities by publishing financial reports that materially understate its lending position by more than $1 billion USD.”
@investvoyager loans disclosed in March 31 financial statements: $2.2 billion.
Actual borrowing as of April 3: $3.1 billion
$1.1 billion was hidden in one working day.
The release doesn’t make sense @TravelingUCC @DOJCrimDiv #VGX pic.twitter.com/dP8g9yvY48
— Michelle DiVita (@ChelleDiVita) January 13, 2023
Former director and CIO for Voyager, Shigo Lavine, highlighted some of the main allegations made in filings in a lengthy February 1st twitter thread.
For example, Voyager allegedly underreported a $609 million loan to crypto hedge fund Three Arrows Capital and also understated Bitcoin (BTC) on its financial statements by 546% to understate the size of its loans.
The debtor provides guarantees for their ability to raise capital and meet liquidity needs.
This led many people (myself included) to incorrectly conclude that Voyager would have been able to survive even if 3AC failed pic.twitter.com/jjnloWDG7A
— Shingo Lavine (@shingolavine) February 1, 2023
According to the filing, crypto exchange Coinbase was also aware of Voyager’s “financial reporting inconsistencies,” and was reportedly backing out of a potential deal to acquire Voyager’s assets after finding the “financials didn’t add up.”
Bankruptcy proceedings already involve the United States Trustee, who is required to file a motion to appoint a chapter 11 trustee when there are “reasonable reasons to suspect” that the debtor “participated in fraud, dishonesty, or actual criminal activity.”
While US Trustees appoint creditors’ committees and review applications for professional compensation among other duties, they may also hire a bankruptcy trustee to manage the debtor’s affairs if the debtor is not permitted to do so himself.
Cointelegraph has reached out to Voyager for response to the allegations and the motion but did not receive an immediate response.
Related: Voyager notified the court that the planned acquisition of Binance was “good business judgment,” much needed
In other news, both Voyager and its creditors have resisted attempts by bankrupt trading firm Alameda Research to recover $446 million in loan repayments.
After starting chapter 11 proceedings on July 5, Voyager demanded repayment of all of its loans to Alameda, and repaid in full.
However, Alameda attempted to recover the funds in a Jan. 30 court filing, arguing that because they paid off the loan within 90 days of filing for chapter 11 bankruptcy themselves, they could “claw back” these funds in favor of Alameda’s creditors.
Voyager said its creditors had suffered a “huge loss” because Alameda made an offer for Voyager assets that they were unable to fulfill, costing more than $100 million. Voyager argues that this puts Alameda’s claims under those of other creditors.
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