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Voyager Digital

From Invertopedia, the encyclopedia of how things fail

Entry 021. An analysis built from the public record, not an insider account. Spot an error? Tell us.

Voyager Digital was a crypto broker and lender that paid customers returns on their deposits and lent the coins out[1][3]. Its biggest borrower, the hedge fund Three Arrows Capital, defaulted on 15,250 bitcoin and 350 million USDC, a loan worth more than $650 million[1][3]. Voyager filed for Chapter 11 on July 5, 2022[1], two sales fell through, and in May 2023 it was cleared to liquidate, with customers getting back about 36% of their claims at first[5][6].

Contents
  1. 1The bet
  2. 2What happened
  3. 3The kill shot
  4. 4Red flags ignored
  5. 5The cost
  6. 6The inversion
  7. 7What survived
  8. 8References

The bet

Voyager took customers' crypto, paid them interest on it, and lent it out, including to the hedge fund Three Arrows Capital[1][3]. It sold the product as safe. Its ads said "YOUR USD IS FDIC INSURED"[2], and in June 2022 Ehrlich wrote to customers that Voyager was "well-capitalized" and their funds were "as safe with us as at a bank"[2]. The bet was that its borrowers would always pay back.

What happened

2021Voyager's partner bank warns it that its FDIC claims are "potentially misleading." The ads keep running.[2]
Nov 2021Voyager's stock trades above $20.[1]
Jun 2022Voyager draws $75 million from a credit line with Alameda Research.[3]
Jun 27, 2022Voyager issues a default notice to Three Arrows Capital, which owes it 15,250 BTC (about $325 million) and 350 million USDC.[3]
Early Jul 2022Two weeks after Ehrlich's "safe" letter, Voyager freezes customer accounts.[1][2]
Jul 5, 2022Voyager files for Chapter 11. Its stock closes at 27 cents.[1]
Sep 26, 2022FTX US wins the auction for Voyager's assets with a bid of about $1.4 billion. The deal never closes.[6][7]
Apr 25, 2023Binance.US ends its roughly $1 billion deal to buy Voyager in a court filing.[6]
May 17, 2023The bankruptcy court approves a liquidation. Customers are expected to get about 36% back at first.[4][5]
Oct 12, 2023The FTC bans Voyager from handling consumer assets and sues Ehrlich over the FDIC claims. The CFTC charges him the same day.[2]

The kill shot

Voyager put most of its loan book with one borrower, so one default was enough to sink it.

Writer Frances Coppola estimated that loans made up nearly half of Voyager's assets and that nearly 60% of the loan book was with Three Arrows[1]. That is an outside analysis, not a company figure. When Three Arrows failed to pay, Voyager had no way to cover the hole.

The marketing made it worse. Voyager was not a bank and the FDIC does not insure crypto; customers' dollars were protected only if the partner bank itself failed[2]. Customers who believed they were safe were locked out of their cash accounts for more than a month and lost more than $1 billion in crypto assets[2].

Red flags ignored

  • One borrower, most of the book. About 60% of the loans, by one outside estimate, were with Three Arrows.[1]
  • Bank words for a non-bank. "YOUR USD IS FDIC INSURED" ran in its ads even after its partner bank called the claims potentially misleading.[2]
  • Reassurance right before the freeze. The "as safe with us as at a bank" letter came two weeks before accounts were frozen.[2]
  • Borrowing to stay liquid. Voyager was drawing on a credit line from Alameda Research in the same month Three Arrows defaulted.[3]

The cost

Three Arrows owed more than $650 million[3]. Voyager listed assets and liabilities of $1 billion to $10 billion each and more than 100,000 creditors[1]. Under the liquidation, customers were expected to get back about 35–36% at first, possibly more depending on a claims dispute with FTX[4][5]. The FTC said consumers lost more than $1 billion in crypto assets[2].

The FTC entered a $1.65 billion judgment against Voyager, suspended so its remaining assets could go to customers through the bankruptcy[2].

The inversion

Count how much of your money sits with your largest counterparty. If one name can sink you, you are not a lender, you are a bet on that name.

What survived

Customers' partial recoveries, paid in cash, supported coins or USDC[5]. Stephen Ehrlich later settled both cases against him: the FTC case, by agreeing to pay $2.8 million and accept a ban on marketing crypto products[8], and the CFTC case, by a September 2025 consent order requiring $750,000 in disgorgement to Voyager customers and a three-year registration ban, without admitting or denying the allegations[8][9].

The clawback fight. In April 2024 a Delaware bankruptcy judge approved a $450 million settlement in which FTX gave up any claim to money Voyager had held back over an Alameda Research loan-repayment suit, releasing it to Voyager's estate[10].

References

  1. ^ “Crypto lender Voyager Digital files for bankruptcy after Three Arrows Capital fails to pay back $650 million loan”. Fortune (CoinDesk's Nikhilesh De and Danny Nelson), July 6, 2022. The July 5 Chapter 11 filing, 100,000+ creditors, $1–10 billion in assets and liabilities, Frances Coppola's loan-book estimate, recent withdrawal halts, share price, Ehrlich.
  2. ^ “FTC Reaches Settlement with Crypto Company Voyager Digital; Charges Former Executive with Falsely Claiming Consumers' Deposits Were Insured”. Federal Trade Commission, October 12, 2023. "YOUR USD IS FDIC INSURED", the partner bank's 2021 warning, the June 2022 letter, the freeze two weeks later, more than $1 billion lost, the ban and suspended $1.65 billion judgment, the CFTC's same-day charges.
  3. ^ “Voyager Digital issues default notice against Three Arrows Capital”. The Block (Andrew Rummer), June 27, 2022. The default notice, 15,250 BTC (~$325 million) and 350 million USDC, more than $650 million, $75 million drawn from the Alameda credit line.
  4. ^ “Crypto-Bankruptcy Update: Voyager Chapter 11 Liquidation Plan Approved After Binance.US Backs Out of Proposed Sale”. Falcon Rappaport & Berkman LLP, May 22, 2023. May 17, 2023 liquidation approval and the ~35% expected recovery.
  5. ^ “Voyager liquidation could start Friday, customers could see cash and crypto starting June 1”. The Block (Stephanie Murray), May 17, 2023. Court approval of liquidation, the ~36% initial recovery, the FTX claims dispute, payouts in cash, coins or USDC.
  6. ^ “Voyager Self-Liquidates After $1 Billion Binance Deal Collapses”. PYMNTS, May 7, 2023. Binance.US ending the $1 billion deal in an April 25 filing, neither the FTX nor the Binance deal going through, self-liquidation and the 36% recovery.
  7. ^ “FTX wins auction for bankrupt crypto lender Voyager”. The Block (Aislinn Keely), September 26, 2022. FTX US's winning bid of about $1.4 billion.
  8. ^ “CFTC settles with ex-CEO of failed crypto firm”. Investment Executive (James Langton), September 17, 2025. Ehrlich's FTC settlement ($2.8 million, marketing ban) and CFTC settlement without admitting or denying.
  9. ^ “Release Number 9122-25”. Commodity Futures Trading Commission, September 15, 2025. The consent order: $750,000 disgorgement through the liquidation and a three-year registration ban.
  10. ^ “Bankruptcy judge signs off on $450M FTX-Voyager settlement”. Cointelegraph (Turner Wright), April 29, 2024. Judge John Dorsey's approval of the $450 million FTX-Voyager settlement releasing the $445 million Alameda reserve and $5 million in escrow.
Categories: Crypto · Lender · Bankrupt in 2022 · Cause of death: concentration · From the public record