Voyager Suffers Potential Data Breach While In Recovery Process

Bankrupt crypto platform, Voyager Digital Holdings Inc., may have been a victim of a hacking attack during the court-supervised process of liquidating assets to repay its customers, according to one of the company’s lawyers.

According to an initial report from Bloomberg, the incident occurred just as the firm reopened its platform, after months of court-led fundraising initiatives, to allow clients to retrieve any residual assets.

During the 30-day window for withdrawal, customers managed to recover about $490 million in assets, accounting for nearly 80% of the available amount, Voyager’s lawyer Darren Azman informed the presiding judge of the Chapter 11 case in Manhattan.

This potential breach has since been reported to law enforcement agencies and is under investigation by bankruptcy officials overseeing the company’s liquidation process. Clientts have reportedly been targeted with scams aimed at gaining access to their digital wallets.

According to Azman, customers were targeted by several scams attempting to infiltrate their digital wallets. These scams typically involved the creation of fraudulent websites, promising customers an increased payout if they linked their non-Voyager cryptocurrency wallets to a newly created account. Upon creating these new accounts, the scammers would proceed to deplete the linked non-Voyager wallets, Azman explained.

Presiding over the telephone-held court hearing, US Bankruptcy Judge Michael Wiles condemned the situation, stating:

“It’s disgraceful. I don’t know what to say. After everything these folks have been through.”

Voyager is the first among a string of bankrupt cryptocurrency firms to commence the repayment of creditors and customers. In April, Binance.US nullified a deal to buy the cryptocurrency platform, which ultimately diminished what customers could recover.

Voyager officials previously projected that customers could recuperate about 36% of what they were owed, or more than 60% if the company prevailed in a court dispute with another bankrupt cryptocurrency firm, FTX Trading. Based on court documents, Voyager possessed about $630 million to settle $1.8 billion in account claims.

Launched sometime in 2018, Voyager rapidly expanded, peaking at 3.5 million users and holding approximately $6 billion worth of cryptocurrency assets, according to court records.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.