Sam Bankman-Fried’s crypto empire has made an offer to buy digital assets to Voyager Digital, which filed for bankruptcy earlier this month and froze clients’ accounts.
As part of his proposal, Bankman Fried Affiliates FTX and Alameda Ventures offer customers the opportunity to obtain cash for their Voyager accounts with new accounts in FTX.
Under this deal, Voyager Clients will have at least partial liquidity immediately, and the opportunity to freely withdraw or reinvest that liquidity in their choice of digital assets,” FTX and Alameda lawyers wrote in a letter to Voyager advisors at Kirkland & Ellis and Moelis & Co.
Voyager said in court papers that it has $1.1 billion of total loan obligations owed on it, including $654 million from hedge fund Three Arrows, which is itself go bankrupt From crypto bets that have gone bad, including the one related to the collapse of the Terra/Luna stablecoin. As Voyager has been increasingly unable to fulfill customer withdrawal requests, on July 1 it froze all trading and withdrawal activity on its platform.
Voyager lawyers told Federal Bankruptcy Court In New York it will propose a stand-alone reorganization and a parallel process to sell the company or its assets. Voyager said Friday that nearly 40 potential buyers have implemented confidentiality agreements to initiate due diligence. It suggested an August 26 deadline for bids, with an auction taking place three days later.
Bankman-Fried, according to his attorney’s letter, seeks to pre-empt this process by requesting an initial response from Voyager by Tuesday, July 26 and signing a negotiating deal over the following weekend.
FTX and Alameda said that the acquisition of Voyager’s crypto-assets and crypto-asset loans, excluding Three Arrows assets, will be acquired by Alameda “with immediately available cash at fair market value.” The second step of the transaction will allow Voyager account holders to get their share of cash in the FTX account where they can continue to invest in cryptocurrency.
“Customers are not obligated to register with FTX and to do so will be entirely voluntary . . . the letter said that any client who does not wish to register with FTX will continue to retain all of their rights and claims in bankruptcy proceedings, but will not obtain early access to distribution in their claim through FTX.”
Bankman-Fried, the 30-year-old billionaire, is already a significant player in Voyager. Alameda has borrowed $377 million in cryptocurrency from Voyager, the second largest after the one extended to Three Arrows. Alameda also loaned $75 million to Voyager earlier this year as it became dire. As part of the takeover proposal, Alameda said it is ready to write off this loan. It also owns nearly a tenth of the virtually worthless Voyager shares, which are listed in Toronto.
“Even those customers who want to be a “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,” the letter reads.