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NextGen Magazine


Judge Approved $1.6M in Retention Bonuses for Employees of Bankrupt Crypto Exchange

S.J. Steinhardt
Published Date:
Jan 25, 2023


While in Chapter 11 proceedings last summer, cryptocurrency exchange Voyager Digital paid 34 employees a total of $1.6 million in retention bonuses, with the approval of a bankruptcy judge, Crain’s New York reported.

Voyager Digital did not identify any recipients of the bonuses, which were approved by Judge Michael E. Wiles of the U.S. Bankruptcy Court for the Southern District of New York in August. The exchange did say that they did not include top managers or board members. These types of bonuses, known formally as key employee retention or incentive plans, are intended to do just what their names describe: retain employees so a business can keep going while in bankruptcy proceedings such as this one.

Voyager’s attorney, Michael Slade of Kirkland & Ellis, told Judge Wiles that “disclosure of the information would also infringe on the employees’ privacy and expose them to scrutiny, which would harm the estate and, frankly, would just not be fair to those particular people,” according to a transcript of the hearing as reported by Crain’s.

“The extraordinary remedy of sealing or redacting most of the [bonus plan’s] economic terms, premised on a speculative fear of bad tidings, goes squarely against the public policy of openness that characterizes bankruptcy cases,” U.S. Department of Justice Trustee Richard Morrissey said.

Hundreds of thousands of crypto customers have discovered their funds are trapped inside bankrupt exchanges, Crain’s reported, including $4.2 billion worth of deposits from 600,000 Celsius Network customers. One Voyager customer, who said at a court hearing that she lost $450,000, asked the judge why bonuses were necessary, and requested that he “please think of us little people who have lost our life savings and want to be heard.”

“I understand customers’ feelings of anger over the situation that they found themselves in,” Judge Wiles said in his ruling. “But taking that out on the business in the sense of disabling it or keeping it from having employees that it needs to be able to sell itself as a going entity actually would just hurt creditors in the long run.”

Lat month, crypto exchange Binance.US agreed to buy Voyager’s assets for $1 billion, pending federal regulatory approval, Reuters reported.