Voyager Digital
A crypto brokerage that marketed accounts as 'FDIC insured,' then froze withdrawals and went bankrupt in 2022 when its roughly $650M loan to hedge fund 3AC defaulted.
Voyager Digital was a publicly traded crypto brokerage that advertised high yields and told customers their money was about as safe as it would be in a bank. That wasn't true.
Founded in 2018 and led by Stephen Ehrlich, Voyager took customer deposits and lent them out for yield. More than $650 million of that went to a single borrower, the hedge fund Three Arrows Capital. When 3AC defaulted in mid-2022, Voyager halted withdrawals and filed for Chapter 11 on 5 July 2022, owing customers more than $1.7 billion.
The marketing is the part worth remembering. Voyager described its accounts as "FDIC insured." That insurance only covered the US dollars held at its partner bank, and only if that bank failed. It did not cover crypto, and it did not cover Voyager going under, which is what happened. Plenty of customers saw "FDIC insured" and relaxed, having misread what was actually being promised. Regulators eventually acted: Ehrlich settled with the FTC and the CFTC over the misleading claims, paying a few million dollars and accepting a ban from crypto-related retail products.
The rescue attempts touched most of the other names here. FTX won the auction for Voyager's assets in September 2022 and then collapsed. A Binance.US deal followed and was abandoned under regulatory review in 2023. Voyager wound itself down, and customers recovered roughly 70 percent. The "FDIC insured" line was technically accurate and still left people badly misled, which is worth remembering the next time a custodian leans on the word.
See Mt. Gox to FTX: The Custody Graveyard for the rest of the graveyard.
Key takeaways
- Voyager lent more than $650M of customer assets to Three Arrows Capital; when 3AC defaulted, it froze withdrawals and filed for bankruptcy on 5 July 2022
- It marketed accounts as 'FDIC insured,' but the FDIC covered only the partner bank's US dollars against the bank failing - not crypto, and not Voyager's own insolvency
- Rescues by FTX and then Binance.US both fell through; customers recovered around 70 percent