A proposal to purchase its digital assets from FTX and its investment arm, Alameda Ventures, was denied by centralized cryptocurrency lender Voyager Digital Holdings because the measures “are not value-maximizing,” and “might harm clients.”
Voyager’s attorneys rejected the offer publicly disclosed by FTX, FTX US, & Alameda on July 22 to buy out all of Voyager’s assets and outstanding loans – except the defaulted loan to 3AC – in a rejection letter accepted by the court on July 24 as part of its current bankruptcy proceedings.
What did the Letter Say?
The letter claims that by undermining “a coordinated, private, competitive bidding process,” making such proposals public could jeopardize any other prospective deals. It further adds that “Alameda-FTX violated various commitments to the Debtors and the Bankruptcy Court.”
The representatives of Voyager made the argument that their own suggested strategy to restructure the business is preferable since it would swiftly provide all of their clients’ cash and as much of their cryptocurrency as feasible.
After cryptocurrency hedge fund Three Arrows Capital (3AC) fell behind on a $650 million loan from the company, Voyager filed for bankruptcy on July 5 in the Southern District of New York for bankruptcy totaling more than $1 billion.
FTX Offers for Help Predatory?
On July 22, three businesses connected to FTX CEO Sam Bankman-Fried proposed Voyager, under which Alameda would take over all of Voyager’s assets and utilize FTX or FTX US to sell and distribute them proportionately among subscribers affected by the bankruptcy.
According to Bankman-proposal, Fried’s users of Voyager might recoup their losses and leave the platform, according to FTX’s news release:
“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 an bankrupt crypto business.
Late on July 24, Bankman-Fried reiterated his companies’ justifications for their acquisition proposal of Voyager in a Twitter thread. He said that because bankruptcy proceedings “may take years,” Voyager’s customers have “gone through enough already” and should be entitled to retrieve their assets as quickly as possible.
The transaction, which claims to compensate Voyager users, is essentially just a liquidation of Voyager’s assets, according to the lawyers for the company on Sunday, “on the premise that benefits AlamedaFTX.”
Additionally, it listed six potential ways in which the proposal “harms customers,” including potential capital gains tax ramifications, an unfair cap on the value of each Voyager user’s account at its value as of July 5, and the effective abolition 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.
In addition, the letter denied rumors that AlamedaFTX had a better chance of succeeding in takeover offers because of ongoing ties between the two businesses, claiming that “nothing could be farther from the truth as indicated by this answer.”
Amid a severe bear market, Bankman-Fried has been at the center of additional purchase discussions. On July 1, Zac Prince, the CEO of BlockFi, another centralized cryptocurrency lender, signed a contract calling for FTX to provide the company $240 million in credit, with a $640 million buyout option.
To value FTX and FTX US at $32 billion and $8 billion, respectively, Bankman-Fried was looking for $400 million in finance. The new fundraising rounds are anticipated to aid other crypto companies’ purchases.