Sam Bankman-Fried’s cryptocurrency empire has made an offer to buy the digital assets of Voyager Digital, which filed for bankruptcy earlier this month and froze customer accounts.
Under its proposal, Bankman-Fried affiliates FTX and Alameda Ventures would allow customers to obtain liquidity for their Voyager accounts through new accounts at FTX.
“As part of this transaction, Voyager customers would immediately receive at least partial cash and the ability to withdraw that cash or reinvest it freely in their choice of digital assets,” the attorneys for FTX and Alameda wrote. in a letter to Voyager advisors at Kirkland & Ellis. and Moélis & Co.
Voyager said in court papers it had $1.1 billion in total loan obligations owed to it, including $654 million from the Three Arrows hedge fund, which itself had gone bankrupt due to betting cryptos gone bad, including those related to the collapse of the Terra/Luna stablecoin. As Voyager increasingly could not meet customer withdrawal requests, on July 1 it froze all trading and withdrawal activity on its platform.
Voyager’s attorneys had told federal bankruptcy court in New York that it would propose a stand-alone reorganization and a parallel process to sell the company or its assets. On Friday, Voyager said nearly 40 potential buyers had signed confidentiality agreements to begin due diligence. He proposed a bid deadline of August 26 with an auction for her conducted three days later.
Bankman-Fried, according to his lawyer’s letter, is seeking to pre-empt this process by requesting an initial response from Voyager by Tuesday, July 26 and signing a negotiated agreement the following weekend.
FTX and Alameda said the acquisition of Voyager’s crypto assets and crypto asset loans, except for that of Three Arrows, would be acquired by Alameda “in immediately available cash at fair market value.” The second stage of the transaction would allow Voyager account holders to get their share of the money into an FTX account where they could continue to invest in crypto.
“Clients are not required to register with FTX and this would be entirely voluntary. . . Any client who does not wish to register with FTX would retain all of their rights and claims under the bankruptcy proceedings, but would not have early access to a distribution on its claim through FTX,” the letter states.
Bankman-Fried, a 30-year-old multi-billionaire, is already a key player at Voyager. Alameda borrowed $377 million worth of cryptocurrency from Voyager, its second loan after one to Three Arrows. Alameda had also loaned Voyager $75 million earlier this year as it got into trouble. As part of its acquisition proposal, Alameda said it was willing to cancel that loan. He also owned almost a tenth of the effectively worthless shares of Voyager, which are listed in Toronto.
“Even customers who want to have a ‘long’ cryptocurrency shouldn’t be forced to do so by holding unsecured debt in a bankrupt business, at least not when it’s possible to receive cash immediately” , indicates the letter.