Former customers of Voyager Digital, a crypto lender that declared bankruptcy in 2022, have fallen victim to a personal data breach. As reported by Tree News, customer details were leaked during the company’s prolonged bankruptcy proceedings. Voyager’s downfall was closely linked to the terraUSD (UST) crash, marking one of the significant setbacks during crypto’s tumultuous year. This article sheds light on the events that led to Voyager’s bankruptcy, the subsequent data breach, and the impact on its former customers.
Voyager Digital’s Downfall: Tied to Three Arrows Capital’s Failure
The troubles for Voyager began in June 2022 when Three Arrows Capital (3AC), a firm managing approximately $10 billion in assets, failed to repay $666 million in loans. 3AC’s business strategy involved borrowing funds from the crypto industry to invest in various crypto projects. However, this strategy backfired dramatically when the value of terraUSD collapsed.
Suspension of Services and Bankruptcy Filing
As a direct result of 3AC’s inability to repay the loans, Voyager Digital was compelled to take drastic measures. On July 1, the company suspended all trading, deposits, withdrawals, and loyalty rewards. This move left customers in limbo, unable to access their assets on the platform. Just four days later, on July 5, Voyager filed for Chapter 11 bankruptcy protection.
At its peak, Voyager Digital boasted 3.5 million users and held $5.9 billion in assets. The vast majority of its users were retail investors with holdings of less than $10,000 USD on the platform. The bankruptcy proceedings created significant uncertainty for these customers, raising questions about the future of their investments and personal data.
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Data Breach Concerns Emerge
The situation took a darker turn when allegations of a data breach emerged. One former customer came forward to share their experience of receiving a phishing letter containing highly detailed personal information that seemingly originated from Voyager. The phishing letter included specific details about the user’s account balance at the time of the bankruptcy and the claim amount submitted during the proceedings. This revelation adds credence to the claims that customer data may have been compromised during Voyager’s financial crisis.
Approval of the Bankruptcy Plan
Despite the uncertainty and data breach concerns, Voyager Digital’s customers eventually voted in favor of the company’s Chapter 11 bankruptcy plan. According to the company’s announcement on February 28, 97% of customers representing 98% of the total claims approved the plan. This approval paved the way for Voyager to address its financial obligations to its former users.
The Path Forward: Cryptocurrency Deposit Return
As part of the bankruptcy resolution, Voyager Digital is obligated to return 35% of customers’ cryptocurrency deposits. This decision followed a failed buyout attempt by Binance.US, another major player in the crypto industry. Notably, FTX, a significant player in the cryptocurrency space, had also attempted to acquire Voyager Digital, but it faced its own collapse in November 2022.
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Conclusion
The fall of Voyager Digital served as a grim reminder of the risks and volatility inherent in the crypto space. While the company’s bankruptcy plan received overwhelming approval from customers, the data breach claims add an additional layer of concern for those affected. It underscores the importance of robust security measures and data protection protocols within the cryptocurrency industry. As the sector continues to evolve, safeguarding user data and financial assets must remain a top priority to foster confidence and trust among investors.
