Centralized crypto lender Voyager Digital Holdings rejected a proposal to buy its digital assets from FTX and its investment arm, Alameda Ventures, on the grounds that the actions “are not value-maximizing” and “might harm clients.”
In a letter of denial acknowledged by the court on July 24, Voyager’s legal team declined the offer made public by FTX, FTX US, & Alameda on July 22 to buy out all of the company’s assets and outstanding obligations, with the exception of the defaulted loan to 3AC.
Making such bids public, according to the letter, might imperil any other potential deals by undermining “a coordinated, private, competitive bidding process.” Alameda-FTX broke numerous promises to the Debtors and the Bankruptcy Court, the statement continues.
Voyager’s reps argued that their own suggested plan for restructuring the company is preferable since it would quickly provide all of their clients’ cash and as much of their cryptos as is practical.
Voyager filed for bankruptcy on July 5 in the Southern District of New York for bankruptcy totaling more than $1 billion after crypto hedge fund Three Arrows Capital (3AC) defaulted on a $650 million loan from the business.
On July 22, three companies affiliated with FTX CEO Sam Bankman-Fried put forth the Voyager proposal, in which Alameda would acquire all of Voyager’s assets and use FTX or FTX US to sell and divide them proportionately among subscribers impacted by the bankruptcy.
According to Bankman-proposal, Fried’s Voyager users might recover their losses and switch to another platform, per the news release from FTX:
“The customers of voyager did not choose to be investors in bankruptcy holding unsecured claims. The purpose of our combined proposal is to aid in the development of a better means to resolve a bankrupt crypto business.”
In a thread on Twitter late on July 24, Bankman-Fried reaffirmed his companies’ rationale for their acquisition proposal of Voyager. Voyager’s customers, he claimed, have “gone through enough enough” and should be entitled to their assets as soon as possible because bankruptcy proceedings “may take years.”
According to the company’s lawyers on Sunday, the transaction is really just a liquidation of Voyager’s assets “on the premise that favors AlamedaFTX,” despite the fact that it purports to recompense Voyager users.
This Could Hurt Its Clients
It also listed six possible ways the proposal “harms customers,” including possible capital gains tax repercussions, an unfair cap on the value of each Voyager user’s account at its value as of July 5, and the effective elimination of the VGX token, which would “destroy over $100 million in value immediately.”
“The Alameda-FTX proposal is nothing more than a cryptocurrency liquidation on the basis that is favorable to Alameda-FTX. A low-ball bid posing as a white knight rescue, that’s what it is.”
The letter also refuted reports that AlamedaFTX would do better in takeover bids due to ongoing relationships between the two companies, stating that “nothing could be farther from the truth as evidenced by this answer.”
Bankman-Fried has been the subject of fresh buyout conversations in the midst of a severe bear market. According to a deal signed on July 1 by Zac Prince, the CEO of BlockFi, a different centralized crypto lender, FTX is to finance the business $240 million with a $640 million buyout option.
Bankman-Fried needed $400 million in financing to value FTX and FTX US at $32 billion and $8 billion, respectively. The fresh financing rounds should facilitate purchases by other crypto businesses.