$6.5M Settlement Reached in Voyager Digital Crypto Investor Lawsuit

On Tuesday, July 2, 2024, Peter Kevin Castel, a senior judge of the United States District Court for the Southern District of New York, granted preliminary approval to a $6.5 million cash settlement between former executives of cryptocurrency lender Voyager Digital Holdings and a class of users who claimed they were aggressively marketed unregistered securities.

According to the order, class counsel can request up to $1.3 million, or 20% of the settlement fund, in attorney fees and expenses up to $40,000. A final settlement hearing will be held on October 8.

Judge Castel’s order stated the parties agreed to settle in January after a full-day mediation session in November, indicating both sides were fully informed of the case’s strengths and weaknesses.

The complaint accused several Voyager executives, directors, and risk committee members of violating securities laws in connection with the company’s offer of Earn Accounts, which paid interest to users lending their digital currencies, and VGX Tokens. The suit was brought on behalf of individuals who purchased these products between January 2020 and November 2022.

The investors alleged that in addition to being unregistered with the SEC, the Earn Accounts and tokens were not protected by the SIPC or FDIC. As a result, they faced disproportionate risk compared to other safeguarded investment products.

Voyager filed for Chapter 11 bankruptcy protection in July 2022 following a run on deposits and default of a $650 million loan to failed crypto hedge fund Three Arrows Capital. Former Voyager CEO Steven Ehrlich was also later sued by the CFTC and FTC for allegedly misleading investors before the company collapsed.

Please contact BlockTribune for access to a copy of this filing.