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A travelling creditor and a financial lawyer want to see a chapter 11 trustee named in the bankruptcy proceedings of Crypto Brokerage Voyager Digital, who would see Voyager lose control of his estate.
In a Feb. 1 motion, Voyager creditor Michelle DiVita accused Voyager of having a “history of financial statement inaccuracies and public misrepresentations that were known, or reasonably discoverable, at the beginning of the bankruptcy proceeding.“
As a result of this pre-bankruptcy behaviour, DiVita believes an examiner or trustee should have been applied for and is now applying for it itself.
The filing alleges that Voyager “concealed the true nature of its lending activities by publishing financial reports that materially understated its loan positions by more than $1 billion.”
@investvoyager loans disclosed on March 31 financial report: $2.2B.
Actual loans on April 3: $3.1B
$1.1B concealed in one business day.
Releases are unconscionable @VoyagerUCC @DOJCrimDiv #VGX pic.twitter.com/dP8g9yvY48
— Michelle DiVita (@ChelleDiVita) January 13, 2023
Shigo Lavine, a former director and head of investments for Voyager, pointed out some of the main charges laid in the case in a long February. 1 Twitter thread.
For example, Voyager allegedly underreported a loan to crypto hedge fund Three Arrows Capital by $609 million and undervalued Bitcoin () in its financial reports by 546% to downplay the size of its loans.
The debtor has provided assurances about its ability to raise capital and address liquidity needs.
This led many (including myself) to incorrectly conclude that Voyager would be able to survive this despite 3AC going under pic.twitter.com/jjnloWDG7A
— Shingo Lavine at @shingolavin February 1, 2023
Depending on the docket, crypto exchange COINBASE also caught wind of Voyager’s “financial reporting inconsistencies” and had reportedly backed out of a potential deal to acquire the assets of Voyager after finding “the financials don’t add up.”
The bankruptcy procedure already implicates a thief from the United States, who is required to make a motion for the appointment of a trustee under Chapter 11 where there are "reasonable grounds to suspect" that the debtor "engaged in actual fraud, dishonesty or criminal behaviour."
The trustee in the United States appoints a committee of creditors and examines requests for professional compensation, among other functions, they can also engage a trustee in bankruptcy to manage the affairs of the debtor if the debtors do not have the right to do so themselves.
Cointelegraph contacted Voyager to obtain a response to the allegations and the motion, but was not provided with an immediate response.
Related: Voyager tells court BINANCE acquisition plan is ‘sound business judgment,’ urgently needed
In other news, both Voyager and its creditors have pushed back at an attempt by bankrupt trading firm Alameda Research to claw back $446 million in loan repayments.
After commencing Chapter 11 proceedings on July 5, Voyager demanded the repayment of all its outstanding loans to Alameda which was repaid in full.
However, Alameda sought to recover the funds in a Jan. 30 judicial records, because they repaid the loans within 90 days after the chapter 11 bankruptcy application was filed, they could "recover" this money in favour of alameda's creditors.
Travel said his creditors suffered "substantial prejudice" because of alameda making an offer for the assets to travel which he could not honour, costing them more than $100 million. Voyager submits that this makes Alameda's application contingent on those of its other creditors.
