Voyager Digital's Reward Program Lost $58M in 2022: Court Filing

Rewards program included high-yield interest accounts, a refer-a-friend scheme and a mechanism to share in the spread of trades should they execute at a lower asking price.

AccessTimeIconMar 1, 2023 at 11:13 a.m. UTC
Updated May 9, 2023 at 4:09 a.m. UTC

Crypto lender Voyager Digital's rewards program, a part of which was once the target of a state regulator investigation, has lost money almost every month since its inception, a new court filing shows.

The rewards program lost over $13 million during the first three months of 2022 and lost $58 million for the whole year, according to the bankruptcy court filing published late Tuesday.

Voyager executives voiced concerns about a loss in providing users a high yield as part of the rewards program, the filing said.

“[I’m] trying to talk to Steve Ehrlich [Voyager’s co-founder and CEO] into taking BTC down to 4%,” Evan Psaropoulos, chief commercial officer at Voyager, is quoted as saying in the filing. “If we want to have that rate on bitcoin, we’d have to be open to strategies beyond basic lending. Or, we have to beef up the team and onboard/lend to riskier borrowers.”

The executives said they viewed the reward program cost as a marketing expense necessary for user acquisition, the filings say. In November 2021, the executives cited the reward and loyalty program as the mechanism that pushed Voyager over the 1 million account mark.

Court documents don't mention the other parts of the rewards program, aside from the high-yield accounts. Yields on Voyager were as high as 12% on certain digital assets.

Facing the significant cost of running the program, Voyager implemented a lending program to fund it. Counterparties for Voyager’s lending program included now-defunct crypto hedge fund Three Arrows Capital, which presented Voyager with a one-page signed memo to show its net asset value.

In March, a number of U.S. states began to investigate the rewards program, accusing it of being an unregistered security. Joseph Borg, director of the Alabama Securities Commission, told CoinDesk in an earlier interview that crypto interest accounts should be subject to the same regulatory scrutiny applied to other interest-bearing investment products.


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