The Case Against Alexander Kassan and Voyager Digital’s Collapse
Alexander Kassan, son of prominent MediaLink founder Michael Kassan, recently found himself at the center of a federal lawsuit related to cryptocurrency transactions conducted before the bankruptcy filing of Voyager Digital Holdings, a well-known cryptocurrency brokerage.
The case, aiming to recover approximately $800,000 from Alexander, was ultimately dismissed earlier this week. Alexander’s legal matter stands out among nearly a hundred similar lawsuits filed against Voyager users, underscoring the growing legal and financial complexities surrounding cryptocurrency in corporate bankruptcies.
Details of the Voyager Digital Lawsuit
Voyager Digital Holdings filed for bankruptcy in 2022, triggering numerous recovery actions as the company aimed to gather assets that had been transferred to creditors just before its collapse. These efforts to recover funds, known as preference actions, sought to reclaim transfers made within the 90 days preceding Voyager’s bankruptcy filing. Alexander Kassan’s case was one of many that Voyager’s bankruptcy administrator pursued, with the goal of returning certain funds to creditors on a proportional basis.
According to court documents, Voyager had filed a complaint indicating that Alexander executed a series of withdrawals or sales of cryptocurrency just before the bankruptcy. During this “Preference Period,” Voyager transferred a total of $798,383.97 to Alexander’s account, making him a target in the company’s recovery efforts.
In May 2024, the administrator appointed by Voyager’s bankruptcy trustee sent Alexander a demand letter. The letter requested the return of what the trustee termed “Avoidable Transfers” and sought additional information to validate any defenses Alexander might present under Section 547(c) of the Bankruptcy Code. Section 547(c) stipulates that certain deposits or purchases might count as “new value” and thus could offset the total amount a defendant might owe. In an attempt to streamline the process, the demand letter also offered Alexander a discounted settlement option to resolve the matter before formal legal proceedings began.
Voluntary Dismissal of the Case
On October 31, the case against Alexander was voluntarily dismissed, ending the lawsuit without any judgment or admission of wrongdoing. Deborah Kovsky-App, Alexander’s attorney, recently said, “This matter has been fully resolved, and the lawsuit has been dismissed. Preference actions are a standard aspect of most bankruptcy cases. Trustees have the authority to reclaim any transfers made by a debtor to its creditors within 90 days preceding the bankruptcy filing and subsequently redistribute the assets pro rata among all creditors. A preference lawsuit does not imply that the creditor engaged in any wrongdoing; it is merely part of the redistributive mechanism of the Bankruptcy Code.”
Kovsky-App added that the lawsuit against Alexander resembled over 100 other preference claims Voyager had pursued against its platform users, who were simply customers conducting transactions before the bankruptcy. She clarified that these preference actions are not accusations of misconduct but are part of the legal process designed to return assets to creditors.
Voyager’s Broader Legal Challenges and FTC Settlement
Voyager Digital’s bankruptcy triggered a wave of financial and regulatory actions, including legal scrutiny by the Federal Trade Commission (FTC). The FTC accused Voyager of misrepresenting the safety of customer funds, leading to consumers being unable to access their accounts post-collapse. In October 2023, Voyager reached a settlement with the FTC, agreeing to permanently cease managing consumer assets.
The FTC’s concerns reflect broader issues in the cryptocurrency industry, where misrepresented security claims have led to devastating financial losses for consumers. Voyager’s settlement serves as a reminder of the consumer protection challenges regulators face in the rapidly evolving crypto market.
Michael Kassan’s Ongoing Dispute with United Talent Agency
While Alexander’s legal matters are now resolved, Michael Kassan himself remains embroiled in a separate, high-stakes lawsuit against United Talent Agency (UTA). Kassan, a significant figure in the media industry and founder of MediaLink, sold his company to UTA in 2021 for $125 million. The acquisition was premised on the expectation that Kassan would retain a senior position; however, the relationship between Kassan and UTA deteriorated, resulting in lawsuits from both sides.
Kassan filed a complaint alleging that he was misled about his role and entitlements after the sale, while UTA countersued, accusing him of misusing company funds for personal expenses. In recent developments, Kassan’s lawsuit has expanded to include allegations of embezzlement against UTA. Kassan’s attorney, Sanford Michelman, stated, “Jeremy Zimmer [UTA’s CEO] fraudulently enticed Michael Kassan into selling MediaLink. Following Zimmer and UTA’s breach of contract, Michael chose to resign, foregoing a $10 million payout to pursue competition.”
Michelman further asserted, “Michael has since claimed that UTA embezzled $300,000 from him, leading to another lawsuit against the agency.” UTA’s attorney, Bryan Freedman, responded, “Kassan’s futile attempts to alter the narrative surrounding these events are lamentable. As repeatedly stated in the legal documents, Kassan personally misappropriated a significant sum of money that he was aware belonged to the company.”
A History of Legal and Financial Challenges
Michael Kassan’s legal battles are not new. His record reflects a history of lawsuits dating back to the 1990s, with several judgments against him and significant financial disputes. In 1995, Kassan faced a $158,000 judgment from American Express Travel, and, two years later, he and a business partner were ordered to pay $51,000 in a case involving Bell Atlantic Mobile Systems. That same year, the United Merchants Association obtained a $43,000 judgment against him.
Reports also indicate that Michael Kassan has faced additional legal challenges in recent years. In 2021, UTA accused him of using agency funds for personal expenses, likening his actions to using UTA as a “personal slush fund.” The expenses listed include luxury travel, designer purchases, and housing costs for Kassan’s driver. This series of financial disputes has been compounded by a federal tax lien of $3.3 million filed against Kassan’s property, as reported by The Ankler.
Acknowledgment of Past Decisions
Kassan has acknowledged some of these past decisions and expressed regret. He stated that during the 1990s, he made a questionable business decision to support failing restaurants by reallocating funds from successful chains to struggling locations, including El Pollo Loco. Though Kassan acknowledges that his actions were misguided, he maintains that he received no personal benefit from these transactions. He remarked, “I was able to maintain my law license because I never profited personally from those actions. Additionally, I was involved in other legal matters related to El Pollo Loco, which involved myself and others concerning associated financial agreements.”
Kassan also noted that while these incidents happened long before he established MediaLink, he has since settled these disputes and even reconciled with many involved parties.
Alexander Kassan’s case dismissal brings closure to a complex legal matter and adds to the growing list of preference actions in cryptocurrency bankruptcies. While Alexander’s lawsuit highlighted the unique challenges within the crypto industry, his father Michael Kassan’s ongoing legal battles emphasize the intensity of high-stakes corporate disputes in media and business.
As the cryptocurrency industry continues to grapple with regulatory oversight and the fallout from bankruptcy filings, cases like Alexander’s underscore the legal intricacies facing creditors and consumers alike. Meanwhile, Michael Kassan’s ongoing litigation with UTA and other past challenges reflect the volatility that can accompany major players in media and entrepreneurial ventures.