Coindesk Logo

Voyager Digital's Creditors Push Back Against Plans to Provide Execs With Legal Immunity

Voyager Digital's Creditors Push Back Against Plans to Provide Execs With Legal Immunity

Voyager Digital's Creditors Push Back Against Plans to Provide Execs With Legal Immunity

Court filings revealed that Voyager executives have attempted to bake broad releases protecting themselves from future lawsuits into their sale agreement with FTX US.

Court filings revealed that Voyager executives have attempted to bake broad releases protecting themselves from future lawsuits into their sale agreement with FTX US.

Court filings revealed that Voyager executives have attempted to bake broad releases protecting themselves from future lawsuits into their sale agreement with FTX US.

AccessTimeIconOct 13, 2022, 5:55 PM
Updated May 9, 2023, 3:59 AM
Voyager Digital CEO Steve Ehrlich at Consensus 2019 in New York (CoinDesk)
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

Bankrupt crypto lender Voyager Digital's plans to sell its assets to crypto exchange FTX US for $1.4 billion have so far gone relatively smoothly, but one major catch emerged on Wednesday – Voyager’s executives have included sweeping legal immunity for themselves in the proposed sale agreement.

In a partly redacted objection to Voyager’s proposed sale agreement, Voyager’s unsecured creditors committee (UCC) pushed back against the provision for “broad releases” that would shield the crypto lender’s directors and officers – the individuals “principally responsible for the debtors’ financial woes,” according to the filing – from future lawsuits.

In its current form, the sale agreement is contingent on the provision of legal immunity.

Attorneys for the UCC describe a “Hobson’s choice” for Voyager’s creditors: to either support the sale agreement as-is and have a chance at getting their money back faster while allowing Voyager’s executives to get off scot-free, or to fight the plan and risk the bankruptcy process “devolving into a morass of litigation, to the sole detriment of unsecured creditors, whose assets will continue to remain frozen for a far longer period of time.”

According to Wednesday’s filings, the UCC conducted an investigation into Voyager’s executives’ conduct to find out what the legal immunity would shield them from and called its findings “sobering.”

Details of the UCC’s findings are currently unavailable, but the attorneys argued that attempts to protect the executives from lawsuits were “particularly egregious” because of the potential for “colorable and valuable causes of action against these directors and officers.”

The UCC’s objection urges the court overseeing Voyager’s bankruptcy proceedings to reject the provision for legal immunity but proceed with the sale agreement.

Voyager filed for bankruptcy in July after the implosion of crypto hedge fund Three Arrows Capital in June. Voyager made a $670 million loan to Three Arrows early this year.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Cheyenne Ligon is a CoinDesk news reporter with a focus on crypto regulation and policy. She has no significant crypto holdings.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.