What CGL is Reading: “Bankrupt Crypto Lender Voyager Plans to Settle CEO, CFO Negligence Claims Related to Three Arrows Loans” by Nelson Wang
On October 18, 2022, CoinDesk, a periodical, reported on the plans of Voyager Digital, a lender in the digital asset space, to enter into a settlement with two of its executives over decisions they made regarding a loan extended by Voyager to Three Arrows Capital (“3AC”), a hedge fund in the crypto space. Voyager, which sought bankruptcy protection in New York, lent 3AC nearly $1 billion in digital assets in March 2022. The loan documentation contained little in the way of disclosure regarding 3AC. Almost immediately, 3AC suffered financial setbacks as the value of a number of crypto currencies collapsed. By June of that same year, an employee of 3AC suggested that Voyager take steps to unwind the credit facility. When that occurred, 3AC entered liquidation in the British Virgin Islands. Within Voyager, a committee of its Board of Directors determined it would not be economic for the lender to pursue a negligence-related legal claim against the two Voyager executives who had originated the 3AC loan. Rather, Voyager is considering a settlement, which would be subject to bankruptcy court approval, under which:
- One of the executive responsible for the loan would pay $1.1 million in cash to Voyager;
- Claims under Voyager’s directors and officers insurance policies would be pursued for as much as $20 million; and
- The two executives involved in the failed loan transaction would be permitted to continue in their current roles at Voyager.
Do you have questions about the oversight that the board of directors should exercise over corporate efforts to pursue financing transactions? If so, contact us to schedule an introductory consultation with Castle Garden Law.
Ted Amley
Managing Attorney
With more than two decades of experience, Ted Amley has advised on hundreds of complex business, finance, and employment matters. His background includes roles at Cravath, Richards Kibbe, and Dentons, along with in-house experience at Morgan Stanley, Blackstone, and UBS. Now leading his own practice, Ted represents individuals, companies, funds, and institutions across sectors such as tech, real estate, healthcare, AI, ecommerce, and finance – offering strategic counsel on
equity, governance, contracts, lending, cross-border deals, and more.
Years of experience: 23+
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