Voyager Digital's (VYGVF) CEO sold shares of the cryptocurrency platform and lender near its peak trading price and a year and a half before the company went into bankruptcy proceedings, a media report says.
Voyager CEO Steven Ehrlich cashed out of the shares in February and March 2021. The lender filed for bankruptcy in July 2022, CNBC reported, citing the Canadian Securities Administration.
Shares of Voyager skyrocketed from 7 cents a share in October 2020 to $26 a share by March 2021. Bitcoin climbed by 455% and Ether jumped by 688% in the same period.
Crypto's all-time highs, set in November, collapsed in the summer, wiping out $2 trillion from the cryptocurrency market.
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Disposing of Shares
The CEO and Delaware limited liability companies tied to him disposed of nearly 1.9 million shares in 11 sales totaling $31 million from Feb. 9 to March 31, 2021, according to the data from the Canadian securities agency.
The three largest of the transactions netted almost $19 million from sales of 1.4 million shares. The sales were linked to a $50 million secondary offering by Stifel Nicolaus in February 2021, the website reported.
Voyager Digital shares peaked near $30 a week after Ehrlich’s last sale.
In July 2022, Voyager would file for bankruptcy after it froze the assets of its customers.
Lending Business Led to Downfall
As a crypto trading platform, Voyager also provided loans and staking services, which are a type of reward for holding certain digital coins.
The company's lending business led to its downfall: Voyager appears to have loaned its clients' funds to crypto hedge fund Three Arrows Capital, also known as 3AC.
3AC defaulted in June on a loan of $667 million granted to it by Voyager. Three Arrows Capital was forced by a court in the British Virgin Islands to enter liquidation.
The move led Voyager to suspend deposits, withdrawals and loyalty rewards on its platform.
"Customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common shares in the newly reorganized Company, and Voyager tokens," Ehrlich wrote on Twitter on July 6.
In its bankruptcy filing, Voyager said it had custody of $1.3 billion in customer crypto assets among its 3.5 million active users.
Voyager had promised massive returns on digital assets but could not sustain its operations during the enormous losses sustained in the crypto market.
The FDIC later ordered Voyager to stop calling their products FDIC-insured, calling the claims “false and misleading.” Bank deposits are FDIC-insured, unlike stocks and alternative assets.
