Ifeanyi’s Investment Musings — Voyager Withdrawal Process
In my January 2021 article I explained how the United States Federal Reserve Bank (The Fed) was waging war on savers by keeping interest rates at 0% which in turn led to banks offering 0.1% interest rates on savings accounts and .45% interest rates on 12 month CDs or in a high yield savings account. I declared that I was fighting back against The Fed by unbanking myself. To Unbank Myself, I decided to purchase higher yielding US Dollar (USD) equivalents in the form of USDC on platforms like Voyager Digital (Voyager), Celsius Network (Celsius), BlockFi and Nexo.
USDC is a type of cryptocurrency (crypto) token known as a stablecoin. Stablecoins, unlike other types of crypto tokens, are designed to keep a stable value against a fiat currency like the USD. The USDC stablecoin, which is issued by a US regulated entity Circle, maintains this stable value against the USD by holding an equivalent amount of USD and highly liquid securities for every USDC token in circulation. By maintaining the asset reserves, Circle is able to offer to redeem $1 of USDC for $1 USD on demand.
Back in January 2021 when a 12 month CD paid .45%, both Voyager and Celsius were offering 10% interest on USDC stablecoins with no lockup period. One was able to buy $1 of USDC for $1 USD and start earning interest rates of at least 8% to 12% on the USDC. That is at least 17 times more interest than one could get from a 12 month CD or high yield savings account and at least 85 times more than one could earn in a regular savings account.
At the time, the platform operators said they were able to provide such high yields because there was a lot of demand for crypto tokens and institutions were willing to borrow USDC at rates over 12% which the platform was giving a greater portion of those returns back to the platform users in the form of the higher interest. They said this practice was similar to a practice called securities lending in the traditional finance world and was one of the most secure ways to lend.
While these yields were quite juicy, I also knew there were risks associated with participating on these platforms which I listed at the time as the following:
- No FDIC Insurance
- Platform Insurance Does Not Cover Lent Out Assets
- Counterparty Risk
- Limited Support Options
Things went well on these platforms until mid 2022 when on June 12 Celsius Network halted withdrawals on its platform. Shortly after on July 1 Voyager also halted withdrawals on its platform and finally on Nov 11 BlockFi followed suit. And just like that, 3 or the 4 companies I had entrusted some of my savings to were no longer operational. All three platforms have since filed for bankruptcy protection. While Nexo is still operational, they no longer offer interest services to United States Citizens.
With all 3 companies in bankruptcy court, platform users like myself have been anxiously waiting to know if we would be able to get our crypto funds back and how much of our funds we would be able to get back.
On March 24 2023, Celsius announced that users who had funds in Celsius custody (non-interest bearing) wallets would need to opt in to be eligible to withdraw any funds. If all your funds were in interest bearing wallets, this option was not applicable to you.
On May 8 2023, Celsius announced that customer wallet users would be able to withdraw 36.25% of the crypto in their custody accounts.
On June 23 2023, Voyager became the first of the 3 platforms to offer partial withdrawals of all assets (not just non-interest bearing assets) from its platform. All the details can be found in the blog post but I will give a high level overview.
Over the next 30 days, users are able to withdraw 35.72% of their funds in crypto form. If you own any crypto tokens that can be transferred off the Voyager platform, you will be able to transfer those tokens to a self custodial wallet or to another crypto trading platform.
The only platforms I am comfortable recommending to anyone at this time are Coinbase (#1 option) and Kraken if you have crypto tokens other than bitcoin (BTC). If you only have BTC, then my recommendation would be to use Strike (using this link will result in you and I getting a referral fee from Strike. Feel free to go to this link to get access without referral).
More information on the initial withdrawal transfer process can be found here on the Voyager website. The image below shows the tokens that can be transferred off the platform if you are all about TL;DR:
If you own crypto tokens that cannot be transferred off the platform (image below), Voyager sold those tokens for USDC which can be transferred off the platform.
At this time, there is no way to transfer USD off the Voyager platform. If you want to get USD back, you have 2 options:
- Follow the withdrawal process to move your crypto off the platform and then sell the crypto for USD and withdraw the proceeds
- Do nothing. After the 30 day crypto withdrawal window closes Voyager plans to sell any remaining crypto and return funds in the form of USD.
Voyager strongly recommends people go with option #1.
There is an embedded video in the blog post showing the withdrawal process which is also available here on YouTube.
If you have any funds on Voyager the prudent move would be to withdraw your available crypto off the platform as soon as possible. That is what I have done.
Disclosures:
Everything I state in this article is my personal opinion. This article is not a paid advertisement for any of the brands referenced.
This article is for informational purposes only. It should not be considered Financial, Tax or Legal Advice. Not all information may be accurate. Consult a financial professional before making any major financial decisions. All investments have a risk profile. Make sure you understand the risks of any investment.
Twitter: @realifeanyiezeh
