Overview
Voyager Digital was a publicly traded (TSX: VOYG) cryptocurrency brokerage founded by Stephen Ehrlich (former CEO of E*Trade's professional trading division) in 2018. The platform operated as a commission-free crypto brokerage, routing orders through multiple exchanges and market makers to offer competitive pricing. At its peak, Voyager had over 3.5 million funded accounts, $5.8 billion in assets, and was one of the most prominent retail crypto platforms in the US and Canada.
VGX (formerly Ethos, then merged with Voyager) was the platform's native token, offering enhanced interest rates on deposits, cashback rewards, and loyalty benefits. Holding VGX in tiered amounts unlocked progressively better yields and perks — a common exchange token model.
Voyager filed for Chapter 11 bankruptcy on July 5, 2022, just weeks after freezing customer withdrawals and trading on July 1, 2022. The proximate cause was devastating:
- Three Arrows Capital default — Voyager had lent approximately $654 million in Bitcoin and USDC to Three Arrows Capital (3AC), a crypto hedge fund. When 3AC collapsed in June 2022, the loan became uncollectible.
- Counterparty risk mismanagement — The $654 million loan to a single counterparty represented an enormous concentration of customer funds in one borrower.
- Yield sustainability — Like other CeFi platforms, Voyager offered above-market yields funded by lending customer deposits, creating inherent fragility.
Exchange Health
Platform is Dead
Voyager Digital is permanently defunct. The platform froze all customer activity in July 2022, filed for bankruptcy, and was ultimately liquidated. A proposed acquisition by FTX collapsed when FTX itself went bankrupt in November 2022 — a darkly ironic twist where Voyager's would-be savior proved even more catastrophically fraudulent.
A subsequent acquisition by Binance.US was announced but fell apart in April 2023 amid SEC regulatory challenges. Voyager ultimately pursued a self-directed liquidation, distributing remaining crypto assets directly to customers at significant losses.
Customer Losses
Customers eventually received approximately 35-36% of their account value through the bankruptcy distribution — a devastating loss, though better than the zero recovery many feared. The distribution came in cryptocurrency rather than fiat, and the process took over a year, during which many assets changed in value.
Token Utility
Zero Utility
VGX has absolutely no utility. The platform it served no longer exists. Interest rate boosts, cashback rewards, loyalty tiers — all permanently destroyed. VGX is a claim on nothing from a company that no longer operates.
Dead Token Walking
Like other dead exchange tokens, VGX may still trade on minor venues. Any remaining price represents pure speculation on a fundamentally worthless asset. There is no platform, no team, no roadmap, and no recovery mechanism.
Tokenomics
Collapsed Economics
VGX underwent a token swap/merger with Ethos (now LGO) before Voyager's collapse, creating a unified VGX token with staking and loyalty mechanics. All of these mechanics are now irrelevant — there is no platform to generate the revenue that funded token buybacks, burns, or staking rewards. The token economic model died with the platform.
The token's history includes a dramatic pump during 2021's bull market — VGX reached over $7 — followed by a collapse to near zero. The concentration of VGX in insider hands and the mechanics of the loyalty tier system created significant sell pressure during the decline.
Transparency
Mixed Record
Voyager, being publicly traded, provided more financial disclosure than most crypto platforms — quarterly financial reports, SEC filings, and public earnings calls. However, these disclosures failed to adequately communicate the extreme concentration risk of the 3AC loan. CEO Stephen Ehrlich publicly emphasized the platform's safety and the quality of its risk management even as the 3AC exposure created existential vulnerability.
The bankruptcy proceedings provided forced transparency about Voyager's actual financial position, revealing the extent of the 3AC exposure and the inadequacy of risk management. The FDIC also intervened, requiring Voyager to stop misleading customers about FDIC insurance coverage — Voyager had implied customer crypto deposits were FDIC insured, which was false.
Risk Profile
Total Loss
VGX represents a total loss. The platform is dead, the token is worthless, and there is no recovery path. Customers who held VGX as an investment (rather than for loyalty perks on the platform) lost everything. Even customers who used VGX for loyalty benefits lost their enhanced yields and the token's value simultaneously.
The broader lesson: exchange tokens are binary bets on the exchange's survival, and concentration risk in counterparty lending can destroy even publicly traded, seemingly transparent platforms.
Risk Factors
- PLATFORM IS DEAD. Voyager filed for bankruptcy July 2022 and has been liquidated.
- $654M 3AC DEFAULT. Single counterparty exposure destroyed the platform.
- VGX IS WORTHLESS. Token utility permanently destroyed.
- Customer losses of ~65%. Bankruptcy distributions returned only ~35% of account value.
- FDIC misrepresentation. Voyager falsely implied crypto deposits were FDIC insured.
- FTX acquisition collapse. The ironic failure of the failed rescue by another failed platform.
- Publicly traded transparency was insufficient. Regulatory filings did not prevent catastrophic risk-taking.
Conclusion
Voyager Digital's collapse was a defining event in the 2022 CeFi contagion — a publicly traded, seemingly legitimate crypto brokerage destroyed by a single counterparty default. The $654 million loan to Three Arrows Capital was a catastrophic concentration of risk that Voyager's risk management failed to prevent or mitigate. When 3AC collapsed, Voyager had no buffer.
The 0.2 overall score reflects a dead platform and worthless token, with a marginal uplift from absolute zero because Voyager was publicly traded (providing some pre-collapse transparency), the bankruptcy process achieved partial customer recovery (~35%), and the platform's failure was driven by counterparty risk rather than outright fraud (distinguishing it from Celsius and FTX, though the FDIC misrepresentation was dishonest). For VGX holders: the token is dead, the platform is gone, and there is nothing to recover.