Bankrupt Crypto Lender Voyager Digital Reports Possible Breach

Bankrupt crypto lender Voyager Digital Holdings has reported a possible breach, revealing the difficulties of protecting customers from online scammers.

The firm’s lawyer, Darren Azman, reported the possible breach during a U.S. Bankruptcy Court hearing, Bloomberg reported Tuesday (Aug. 1). The potential breach occurred as the company was allowing customers to recover their money as part of its court-supervised liquidation process.

Responding to the news that the platform may have been hacked just as it reopened, Judge Michael Wiles said, “It’s disgraceful. I don’t know what to say. After everything these folks have been through.”

The breach has been reported to law enforcement and is being investigated by the bankruptcy officials who are overseeing the wind down of Voyager Digital Holdings, according to the report.

Voyager’s lawyer said the firm’s customers have been relentlessly targeted with various scams, including one where they are asked to link their non-Voyager crypto wallets to a new account with the pretense of an increased payout, per the report. In reality, these wallets are then reported to be quickly drained.

Only a few customers have fallen for those scams, Azman said, according to the report.

Voyager said in a May 5 court filing that it was closing down following two failed attempts to sell itself.

The announcement came 10 days after Binance.US walked away from a plan to purchase Voyager for $1 billion, giving no reason for its decision when announcing its termination of the deal.

Voyager originally filed for Chapter 11 bankruptcy protection in July 2022, saying in a filing before the bankruptcy court that it was “facing a short-term ‘run on the bank’” after a borrower defaulted on a $650 million loan.

Two months later, in September 2022, crypto exchange FTX won an initial auction for Voyager’s assets, only to declare bankruptcy itself two months later.

The cryptocurrency sector’s woes have long included hacks from bad actors. In 2022, hackers stole $3.8 billion from crypto companies, according to blockchain intelligence platform Chainalysis.

That total was up from the $3.3 billion stolen in hacks in 2021 and made 2022 the biggest year in the cryptocurrency sector’s decade-plus history for losses stemming from hacks, according to Chainalysis’ crypto crime report.