Scammers set their sights on Voyager Digital customers during the month-long window when they were able to withdraw some portion of their funds from the bankrupt crypto brokerage, Bloomberg reported, citing Darren Azman, a lawyer for the firm. Law enforcement has been notified of the situation, he added.
Voyager customers withdrew $490 million between June 23 and July 22. That sum was almost 80% of the amount available, Azman said at a hearing of the Southern District of New York Bankruptcy Court held by telephone.
According to Bloomberg, scammers used various approaches, with a typical method being to offer Voyager customers higher returns through fake websites that drained customers’ wallets after being linked to them.
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The problem did not go completely unnoticed at the time. The California Department of Financial Protection and Innovation (DFPI) issued a warning that Voyager customers were receiving letters, calls and emails using Voyager CEO Stephen Ehrlich’s name and falsely offering higher returns for users of a sham website. That warning was dated July 19. The DFPI said:
“The communications may include consumer information that is correct, including the total initial return amount customers were expecting to receive in the Voyager bankruptcy.”
Very few customers were fooled by the scams, Azman said.
Voyager once had 3.5 million customers and $6 billion worth of crypto assets. It filed for bankruptcy on July 5, 2022 in the wake of the Three Arrows Capital collapse. It is the first of the failed crypto firms to return any money to its customers.
FTX US bought Voyager’s assets in September, but the FTX collapse prevented that deal from going through. Binance.US was set to buy $1 billion of Voyager assets in April but backed out at the last minute. A bankruptcy plan was approved by Judge Michael Wiles in May that provided customers with about 36 cents for every dollar of their claims.