Sam Bankman-Fried, founder and CEO of the FTX Cryptocurrency Derivatives Exchange, speaks during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, USA, on Wednesday, August 17, 2022.
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Clients of beleaguered cryptocurrency lender Voyager Digital can take solace in the news that FTX, the bitcoin exchange founded by billionaire Sam Bankman-Fried, is set to take over the company’s assets after winning a bankruptcy auction. .
After several rounds of bidding, the US subsidiary of FTX was selected as the best offer for the Voyager assets, the companies said in a statement late Monday. The offering was valued at approximately $1.4 billion, a figure that includes $1.3 billion for the fair market value of Voyager’s digital assets, plus “additional consideration” of $111 million in anticipated incremental value.
Voyager filed for Chapter 11 bankruptcy in July after a tumultuous drop in digital currency prices left it unable to redeem its customers’ withdrawals. The company’s demise was due in part to the collapse of Three Arrows Capital, a so-called hedge fund that borrowed from other institutions, such as Voyager, to make risky bets with tokens, including the collapsed stablecoin terraUSD. In June, 3AC defaulted on Voyager loans worth $670 million.
Voyager hinted at a possible transition of its clients to FTX US, saying that the exchange will “allow clients to trade and store cryptocurrencies after the conclusion of the Company’s chapter 11 cases.” The asset purchase agreement will be filed with the US Bankruptcy Court for the Southern District of New York for approval on October 1. 19. The sale of Voyager’s assets to FTX US is contingent on a creditor vote, as well as “other customary closing conditions,” according to the statement.
The move marks a potential step to compensate Voyager users, who have few legal avenues to receive payment for cryptocurrency they stored on the platform before it froze customer withdrawals. In bankruptcy proceedings, clients of crypto platforms are treated as unsecured creditors, meaning that they are not actually entitled to the cryptocurrencies they purchased and, like other creditors, would have to go to court to try and recover. your money. Creditors of Mt. Gox, which sank in 2014, is still waiting to be reimbursed.
Voyager previously claimed on its website and in marketing materials that user funds were protected by the Federal Deposit Insurance Corporation, but this was technically not true: Voyager’s cash deposits are held at Metropolitan Commercial Bank, a lender based in New York. FDIC insurance only covers the bank failure, not Voyager. In July, the FDIC and the Federal Reserve sent Voyager a cease and desist letter. ordering it to stop claiming that it was insured by the FDIC.
In the crypto winter of 2022, Bankman-Fried has become a savior for numerous companies that fell victim to the falling value of digital tokens and the resulting liquidity problems on their platforms. The 30-year-old quantum trader-turned-cryptoextraordinary has been bargain shopping amid the recent carnage of the industry.
In July, FTX signed a deal giving it the option to buy out lender BlockFi after providing a $250 million line of credit. Bankman-Fried says she still has plenty of cash to spend on more deals. And you may soon get even more, with sources telling CNBC that FTX is raising another $1 billion of investors in a next round of financing.
– CNBC’s Kate Rooney contributed to this report
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