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 client accounts.
As part of his proposal, Bankman-Fried’s affiliates of FTX and Alameda Ventures would allow customers the opportunity to obtain liquidity for their Voyager accounts through new accounts on FTX.
“Within this transaction, Voyager’s customers would immediately receive at least partial liquidity and the ability to withdraw that liquidity or freely reinvest it in their choice of digital assets,” lawyers for FTX and Alameda wrote in a letter to Voyager’s advisers at Kirkland & Ellis and Moelis & Co.
Voyager said in court documents that it has $1.1 billion in total loan obligations owed, including $654 million from hedge fund Three Arrows, which itself went bankrupt of crypto bets have failed, including those related to the collapse of the Terra/Luna stablecoin. As Voyager became increasingly unable to meet user withdrawal requests, it froze all trading and withdrawal activity on its platform on July 1.
Voyager’s lawyers said federal bankruptcy court in New York that he will propose an independent reorganization and a parallel process of selling the company or its assets. Voyager said Friday that nearly 40 potential buyers have signed confidentiality agreements to begin due diligence. He proposed a deadline for submission of bids until August 26, and to hold the auction for that three days later.
Bankman-Fried, according to a letter from his attorney, is seeking to preempt that process by seeking an initial response from Voyager by Tuesday, July 26, and signing the deal over the following weekend.
FTX and Alameda said the acquisition of Voyager’s crypto assets and crypto asset loans, other than the Three Arrows loans, will be purchased by Alameda “for immediately available cash at fair market value.” The second step of the transaction would allow Voyager account holders to receive their portion of the cash in an FTX account where they could continue to invest in cryptocurrencies.
“Customers are not required to apply for FTX and it would be completely voluntary. . . Any customer who does not wish to file with FTX will continue to retain all of their rights and claims in the bankruptcy proceeding, but would not receive early access to the distribution of their claims through FTX,” the letter states.
Bankman-Fried, a 30-year-old multibillionaire, is already a key player in Voyager. Alameda borrowed $377 million worth of cryptocurrency from Voyager, its second largest loan after the one made to Three Arrows. Alameda also loaned $75 million to Voyager earlier this year because it was in trouble. As part of its purchase proposal, Alameda said it was willing to write off that loan. He also owned nearly a tenth of Voyager’s effectively worthless Toronto-listed shares.
“Even those buyers who want to be ‘long’ cryptocurrency should not be forced to do so by holding unsecured claims on a bankrupt firm, at least not when there is an opportunity to get immediate cash,” the letter said.