Scammers took advantage of an opportunity to defraud customers of bankrupt crypto brokerage Voyager Digital, according to a report from Bloomberg. The scammers targeted customers during a month-long window when they were able to withdraw some of their funds from the brokerage. Darren Azman, a lawyer for Voyager, stated that law enforcement has been notified of the situation.
Between June 23 and July 22, Voyager customers withdrew a total of $490 million. This amount represented nearly 80% of the funds available to customers during the withdrawal period. Azman revealed these figures during a hearing of the Southern District of New York Bankruptcy Court.
According to Bloomberg, scammers utilized various methods to defraud Voyager customers. One common approach involved offering customers higher returns through fake websites. These websites would drain the customers’ wallets after being linked to them.
The problem did not go completely unnoticed at the time. The California Department of Financial Protection and Innovation (DFPI) issued a warning on July 19, stating that Voyager customers were receiving letters, calls, and emails falsely offering higher returns. These communications were using the name of Voyager CEO Stephen Ehrlich. The DFPI noted that the communications contained correct information about the customers’ expected return amounts.
Despite the attempts by scammers, very few customers were actually fooled by their schemes, as stated by Azman.
Voyager Digital, once boasting 3.5 million customers and $6 billion worth of crypto assets, filed for bankruptcy on July 5, 2022, following the collapse of Three Arrows Capital. It became the first of the failed crypto firms to return any money to its customers.
While FTX US had initially planned to acquire Voyager’s assets in September, the FTX collapse prevented the deal from proceeding. Similarly, Binance.US had planned to purchase $1 billion of Voyager assets in April but backed out at the last minute. In May, a bankruptcy plan was approved by Judge Michael Wiles, offering customers approximately 36 cents for every dollar of their claims.
In conclusion, scammers targeted Voyager Digital customers during a critical period when they were able to withdraw funds from the bankrupt crypto brokerage. These scammers employed various tactics, including creating fake websites that drained customers’ wallets. While the scamming attempts were noticed, they were largely unsuccessful in deceiving customers. Voyager Digital continues to navigate the bankruptcy process, as it was the first of the failed crypto firms to provide any returns to its customers.
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