Sam Bankman-Fried’s cryptocurrency empire has made an offer to buy the digital assets of Voyager Digital which had filed for bankruptcy earlier this month and frozen the accounts of customers.
As a part of his proposal, Bankman-Fried’s affiliates FTX and Alameda Ventures would allow customers the chance to get liquidity for their Voyager accounts through new accounts at FTX.
“Under this transaction, Voyager’s customers would receive at least partial liquidity immediately, and the opportunity to withdraw that liquidity or freely reinvest it in their choice of digital assets,” wrote lawyers for FTX and Alameda in a letter to Voyager’s advisers at Kirkland & Ellis and Moelis & Co.
Voyager said in court papers that it had $1.1bn in total loan obligations it was owed, including $654mn from the hedge fund Three Arrows, which itself had gone bankrupt from crypto bets gone bad, including those related to the collapse of the Terra/Luna stablecoin. As Voyager increasingly could not meet customer withdrawal demands, on July 1 it froze all trading and withdrawal activity on its platform.
Voyager’s lawyers had told the federal bankruptcy court in New York that it would propose a standalone reorganisation and a parallel process to sell the company or its assets. On Friday, Voyager said that nearly 40 potential buyers had executed confidentiality agreements to begin due diligence. It has proposed a bid deadline of August 26 with an auction for it conducted three days later.
Bankman-Fried, according to his lawyer’s letter, is seeking to pre-empt that process by requesting an initial response from Voyager by Tuesday July 26 and signing a negotiated deal over the following weekend.
FTX and Alameda said the acquisition of Voyager’s crypto assets and crypto asset loans, except that of Three Arrows, would be acquired by Alameda “in immediately available cash at fair market value”. The second step of the transaction would allow Voyager account holders to get their portion of the cash in an FTX account where they could continue to invest in crypto.
“Customers are under no obligation to sign up with FTX and doing so would be fully voluntary . . . Any customer that does not wish to sign up with FTX would continue to retain all of their rights and claims in the bankruptcy proceedings, but would not receive early access to a distribution on their claim via FTX,” the letter said.
Bankman-Fried, a 30-year-old multi-billionaire, is already a crucial player at Voyager. Alameda has borrowed $377mn worth of cryptocurrency from Voyager, its second-largest loan after the one extended to Three Arrows. Alameda had also lent $75mn to Voyager earlier this year as it became distressed. As a part of its acquisition proposal, Alameda said it was willing to write off that loan. It also owned nearly a tenth of Voyager’s effectively worthless stock, which is listed in Toronto.
“Even those customers who wish to be ‘long’ cryptocurrency should not be forced to do so by holding unsecured claims in a bankrupt company, at least not when there is an opportunity to receive cash immediately,” said the letter.