Customers cope with frozen assets after Voyager bankruptcy – The National Law Review | Vette Leader

Crypto winter has overshadowed summer for many Voyager customers. With the start of Voyager’s Chapter 11 filing in July, customer accounts were frozen. Unable to trade their own crypto assets, some frustrated clients rushed to consult legal counsel. Others began studying bankruptcy law in hopes of finding a legal solution. Just late last week, on Aug. 4, some customers found relief from the crypto storm: Judge Michael Wiles granted Voyager’s request to allow up to $270 million in cash withdrawals for certain customers who had cash in their accounts to allow.

But what about Voyager’s customers whose crypto assets are not included in the court’s ruling? Judge Wiles also approved Voyager’s bidding process motion with certain modifications and set an expedited timetable for a sale of substantially all of Voyager’s assets, ending with a September 8 bankruptcy sale hearing. Voyager had approximately $1.3 billion worth of crypto assets on the platform as of early July 2022. These assets are expected to be sold with the Company by September 8th.

Ignoring the frustration of many customers, which expressed itself in a broad letter campaign,1 Voyager is advancing the bidding process to sell the company. This has been Voyager’s goal from the start, although some Voyager customers still raised questions about the status of their crypto assets at the Aug. 4 hearing. Voyager has claimed ownership of customers’ crypto assets by submitting the most recent user agreement to the court. The latest version states that customers’ crypto assets will be traded under the Voyager name. Based on this allegation, Judge Wiles has approved Voyager’s bidding process motion without further challenging ownership of crypto assets.

While a sale process is a typical event in bankruptcy, this is not a typical bankruptcy. Let’s not forget. This case is about Voyager’s customers and it begs a question: can Voyager’s customers get their crypto assets back without going through bankruptcy proceedings?

The answer can be yes. Here’s the argument Voyager customers could make and the next steps to consider:

  • Voyager likely holds private keys from the crypto wallets or from the cryptocurrency transactions for the benefit of Voyager customers

  • These private keys are not owned by the bankruptcy estate under Section 541(b)(1) of the Bankruptcy Act, which states that the estate’s ownership “excludes any power which the debtor may exercise solely for the benefit of any entity other than that of the bankruptcy law of the debtor.” “

    • Voyager’s act of holding private keys qualifies for the debtor’s power exception because the keys allow Voyager, the holder, to transfer the crypto assets

    • Voyager exercises this authority solely for the benefit of Voyager customers because the security of private keys is of critical importance to customers

    • Unless a Voyager customer waives ownership through its contract with Voyager, Voyager does not benefit from holding the private keys, as private keys are used solely to prove ownership and transmit the crypto assets, the acts that Voyager does -Customers inherently rightfully own their crypto assets

  • Because Voyager’s holding of private keys is an authority it exercises solely for the benefit of one corporation (the group of Voyager customers), private keys are not owned by the Voyager estate and should be owned by Voyager customers

If the crypto assets are not owned by the bankruptcy estate, Voyager customers are entitled to restitution without requesting a stay of bankruptcy. If the court agrees, important process points must be observed given the customer identification sensitivity:

  • According to Voyager’s latest user agreement, Voyager holds customers’ crypto assets in omnibus accounts or wallets. This means that not every customer has their own wallet for crypto assets. As such, customers must designate a trusted group of individuals or third party responsible for obtaining a small number of Omnibus Account private keys and either transferring or transforming them in a manner consistent with the will of the customer, not Voyagers

  • The transfer or conversion of assets into cryptocurrency should be based on Voyager customers’ prorated shares and Voyager should make this information available to the trusted group of persons or third party designated by Voyager customers

  • Also, the transfer of private keys must be done in a confidential manner, as an information leak could allow non-customers to take ownership of crypto assets and transfer them before the customer’s representative can get hold of the assets

How do you determine ownership of private keys?

  • Private key ownership is likely to be determined by the contracts signed by Voyager and its customers

  • Different Voyager customers have signed different contracts with Voyager, so it is important that each customer consult legal counsel to review their contract and determine the nature of ownership under the contract

  • Based on the analogy of bankruptcy law, a customer’s ownership status (as opposed to a private key owned by the estate) will likely depend heavily on how much control Voyager exercises over that property. If a debtor only owns property for the benefit of a creditor, that property does not belong to the debtor’s estate; However, if the debtor uses and/or commingles that property and is given a high degree of control over the property, it can be determined that the creditor has relinquished his property rights

Based on that argument, what are a Voyager customer’s potential next steps?

  • Form a group with other Voyager customers who have signed similar private key ownership agreements

  • Submit individual claims or a claim as a group to recover private keys from crypto assets

  • Discuss other possible arguments with your attorney to help recover crypto assets while awaiting the court’s decision on the claims filed.

The private key is a key element of the blockchain. It can also be key for Voyager customers to protect themselves through the ongoing court-approved sales process.


1. Voyager customers have submitted approximately 30 letters on the docket at For example, in a letter to Judge Wiles filed on July 21, 2022, a Voyager customer alleged that “many Voyager customers…were literally cheated.”

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