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
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

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.

  • DCG Reaches In-Principle Deal With Genesis Creditors
    02:26
    DCG Reaches In-Principle Deal With Genesis Creditors
  • Crypto Custodian Prime Trust Files for Bankruptcy
    02:06
    Crypto Custodian Prime Trust Files for Bankruptcy
  • Celsius Can Start Converting Altcoins to Bitcoin, Ether as of July 1, Judge Says
    04:58
    Celsius Can Start Converting Altcoins to Bitcoin, Ether as of July 1, Judge Says
  • FTX’s Bankruptcy Fees on Track to Be 'Very Expensive', Court Examiner Says
    05:48
    FTX’s Bankruptcy Fees on Track to Be 'Very Expensive', Court Examiner Says
  • 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.


    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.


    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.