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Voyager rejects FTX’s ‘low ball’ offer, calls it ‘misleading’

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Voyager rejects FTX’s ‘low ball’ offer, calls it ‘misleading’

Voyager rejects FTX’s ‘low ball’ offer, calls it ‘misleading’ Oluwapelumi Adejumo · 5 hours ago · 2 min read

Voyager’s letter said FTX’s offer is designed to “generate publicity” for the SBF-led firm “rather than (add) value for Voyager’s customers.”

2 min read

Updated: July 25, 2022 at 11:21 am

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Cover art/illustration via CryptoSlate

Struggling crypto lender Voyager Digital rejected FTX’s offer to buy all its assets and refund customers in a July 24 letter due to it being a “low-ball” offer that may “hurt customers.”

FTX’s liquidity offer for Voyager’s customers

On July 22, FTX submitted a joint proposal that would have seen it provide liquidity for customers of the bankrupt crypto lender.

According to the proposal, the crypto exchange would purchase all of Voyager Digital’s assets at fair market value bar its $650 million loan to Three Arrows Capital (3AC).

Voyager users who choose to participate in the scheme would be able to open an FTX account that would have an opening balance of their claims against the bankrupt firm. These users can choose to withdraw these funds or use them to purchase crypto.

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According to Sam Bankman-Fried, the proposal “allows customers to obtain early liquidity and reclaim a portion of their assets without forcing them to speculate on bankruptcy outcomes and take one-sided risks.”

Voyager Digital rejects offer

Voyager lawyers have fired back at FTX’s public offer, saying it is “misleading” and could affect any potential deal.

Voyager revealed that it had filed a bidding motion procedure for how bidding should happen. The firm “will entertain any serious proposal made pursuant to the Bidding Procedures described in its Motion.”

The letter said FTX’s proposal was in contravention of the bidding procedure and was also designed to “generate publicity” for the SBF-led firm “rather than (add) value for Voyager’s customers.”

The strongly worded letter advised customers to read through FTX’s proposal so they can discern for themselves that it does not benefit them. According to the document:

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“The AlamedaFTX proposal is nothing more than a liquidation of cryptocurrency on a basis that advantages AlamedaFTX. It’s a low-ball bid dressed up as a white knight rescue. To anyone who reads the proposal even in a cursory way, it will be obvious that the stand-alone Plan that Voyager filed is capable of delivering far more value to customers than the AlamedaFTX proposal.”

The letter concluded that FTX violated its obligations to the Debtors and the Bankruptcy Court. But Voyager remains committed to the restructuring process and finding a “value-maximizing transaction that is beneficial to Voyager’s customers and stakeholders.”

SBF responds

FTX CEO Sam Bankman-Fried has responded to the letter stating why his firm submitted the offer.

1) Voyager lost customer assets, but it still has the majority left.

Why haven’t those been returned to customers yet?

Sad facts from a bankruptcy process.

— SBF (@SBF_FTX) July 25, 2022

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SBF questioned why Voyager has failed to refund customers’ assets since it still has a majority. According to him, the bankruptcy process could take several years, citing the example of Mt. Gox, which is yet to refund customers’ funds seven years after filing for bankruptcy.

SBF rationalized that while Voyager isn’t paying its customers, it is already losing money to bankruptcy as it has to pay all the consultants involved in the process

The FTX chief added that those opposing his proposal were the third parties involved rather than the affected customers.

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TSX-Listed Voyager Digital ‘Temporarily’ Suspends Trading, Deposits, And Withdrawals

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TSX-Listed Voyager Digital ‘Temporarily’ Suspends Trading, Deposits, And Withdrawals

After the TSX-listed Voyager Digital revealed that it was owed $655 million from Three Arrows Capital (3AC), the company secured a $500 million credit line from Alameda Ventures in order to “safeguard customer assets.” Five days later on July 1, Voyager announced the crypto company was “temporarily suspending trading, deposits, withdrawals and loyalty rewards.”

Another Crypto Firm Freezes Withdrawals, Voyager CEO Says ‘It Was a Tremendously Difficult Decision’

  • The embattled digital currency firm Voyager Digital (OTCMKTS: VYGVF) announced a temporary withdrawal and deposit pause on Friday, according to a recent press release. Voyager explained that it was “temporarily suspending trading, deposits, withdrawals and loyalty rewards, effective at 2:00 p.m. Eastern Daylight Time today.”
  • “This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” Stephen Ehrlich, the chief executive officer at Voyager said in a statement.
  • VYGVF shares plummeted to $0.29 per share after the previous close at $0.44 per share on Thursday. Shares have lost 99% since the stock’s all-time high at $27.39 per share on April 1, 2021.
Voyager Digital (OTCMKTS: VYGVF) closed the day at $0.31 on Friday, July 1, 2022.
  • “This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together,” Ehrlich added. “We will provide additional information at the appropriate time.”
  • In addition to the update concerning deposits, withdrawals and loyalty rewards, Voyager summarized 3AC’s debt to the company. “Voyager also provided the following financial and balance sheet updates, per requirements of Canadian securities laws,” the company explained.
  • Just last week, Voyager opened a credit line with Alameda Ventures and said it secured a revolving $500 million line of credit from the firm. The announcement came after Voyager revealed that it was owed $655 million in the form of bitcoin (BTC) and the stablecoin usd coin (USDC).
  • Furthermore, Voyager has also disclosed that it is working with Kirkland & Ellis LLP for legal assistance and Moelis & Company and The Consello Group for financial advice.
  • Voyager’s withdrawal pause follows the suspension of withdrawals the crypto lender Celsius initiated weeks ago. Celsius has yet to update the community concerning the company’s official plans to resolve its financial hardships.
  • However, on Thursday, Celsius published a blog post that says the firm is “focused and working as quickly as we can to stabilize liquidity and operations.” Celsius further said that it was “pursuing strategic transactions,” and “restructuring” liabilities, “among other avenues.”
  • On the same day Voyager temporarily froze the exchange’s main operations, Blockfi co-founder Zac Prince disclosed that Blockfi lost roughly $80 million due to 3AC exposure and stressed it was “a fraction of losses reported by others.”
  • Voyager’s announcement also discussed “the court-ordered liquidation process in the British Virgin Islands” as the crypto firm said that it was “actively pursuing all available remedies for recovery from 3AC.”

What do you think about Voyager Digital temporarily pausing withdrawals? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: T. Schneider / Shutterstock.com

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Alameda Ventures

Bankman-Fried Is Looking At “Secretly insolvent” Small Exchanges & Crypto Miners

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Bankman-Fried Is Looking At “Secretly insolvent” Small Exchanges & Crypto Miners

It’s Sam Bankman-Fried’s moment. The FTX and Alameda Ventures golden boy put both of his companies in a winning position and seems to be carrying the spoils away. The recent Forbes piece about secretly insolvent exchanges puts it best, “Like J.P. Morgan during the stock market panic and crash of 1907, Bankman-Fried is taking advantage of the crypto chaos to expand his empire.” Rumors about his involvement in engineering the “crypto chaos” appear to be greatly exaggerated.

NewsBTC reported on FTX’s bailout of BlockFi and Alameda bailing Voyager. In the first article, we summarized the congested macro situation:

“Over the last few weeks, the crypto market has been trending down. The contagion effect of the Terra/ Luna extinction event rocked every company out there, most of all those who offered yield on cryptocurrency deposits like BlockFi and Celsius and hedge funds like Three Arrows Capital. These companies’ problems and possible liquidation of assets, in turn, sent the crypto market into even more turmoil.”

In the Fobes piece, speaking about BlockFi and Voyager’s bailouts, they paint a similar picture with a crucial difference. Here, Bankman-Fried is performing a sacrifice:

“Between FTX and his quantitative trading firm Alameda, he provided the companies with $750 million in credit lines. There is no guarantee that Bankman-Fried will recoup his investment. “You know, we’re willing to do a somewhat bad deal here, if that’s what it takes to sort of stabilize things and protect customers,” he says.”

And, as you can read, that’s according to Bankman-Fried himself. A few lines below, the article casts doubt on his assessment, “Bankman Fried’s cash infusions are far from altruistic. He has emerged as a smart vulture capitalist in the beleaguered crypto market, knowing full well that his own fortune depends on its healthy rebound and growth.”

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Robinhood price chart on NASDAQ | Source: TradingView.com

Bankman-Fried Sets Sight On Small Exchanges And Miners

The rumor that FTX is looking for a way to acquire Robinhood circulated today. The Forbes article elaborates on that subject. “Bankman Fried has also bought into crypto brokerage Robinhood, where FTX has already accumulated a 7.6% stake, and is rumored to be considering an acquisition.” 

Not only that, Forbes estimated that there are more than 600 crypto exchanges in the world. Then, they quote Bankman Fried claiming, “there are some third-tier exchanges that are already secretly insolvent”. Is the implication that his two companies are considering buying some of them? Maybe. However,  Bankman Fried will be picky about exactly which ones:

“There are companies that are basically too far gone and it’s not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved.”

In a strange turn of events Bankman-Fried, one of Proof-Of-Stake’s biggest proponents, expressed interest in “crypto miners”. Even stranger, the article then proceeds to list two bitcoin mining companies. Who introduced the word “crypto” in the conversation, Bankman-Fried or Forbes?

“Bankman-Fried also has his eye on crypto miners, many of whom leveraged their balance sheet at breakneck pace to quickly scale and take advantage of this 21st century digital gold rush. The stocks of publicly-trading crypto miners including Marathon Digital Holdings and Riot Blockchain are down more than 60% year to date.”

Finishing With Tether For Some Reason

Without warning or apparent reason, the Forbes article ends with Sam Bankman-Fried’s thoughts on Tether. “I think that the really bearish views on Tether are wrong…I don’t think there is any evidence to support them,” he says.

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Featured Image by 41330 on Pixabay| Charts by TradingView

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Crypto Firm Voyager Digital Secures A $500M Line Of Credit From Alameda Ventures To Cope With 3AC Exposure

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Crypto Firm Voyager Digital Secures A $500M Line Of Credit From Alameda Ventures To Cope With 3AC Exposure

Three days ago, Bitcoin.com News reported on the publicly listed company Voyager Digital after the crypto firm announced that it was owed $655 million worth of digital assets. Now according to a press release from Voyager, the company has secured funds from Alameda Ventures in order to get more access to liquidity.

Voyager Borrows $500 Million from Alameda

Voyager Digital Holdings, Inc. has revealed a collaboration with Alameda Ventures as the venture company has provided Voyager with a line of credit. The funds are “intended to help Voyager meet customer liquidity needs during this dynamic period.” Last week, reports noted that Voyager was suffering through financial hardship due to its exposure with Three Arrows Capital (3AC). Voyager said in a note to investors that it is owed 15,250 BTC and 350 million USDC, and the company gave 3AC a deadline to pay back the funds.

Voyager’s TSX-listed stock plummeted after the announcement losing more than 50% in value in less than 24 hours. By borrowing from Alameda, Voyager will use the funds to meet customer liquidity demands and strengthen operations during the crypto market volatility. “[Voyager] entered into a definitive agreement with Alameda for a US$200 million cash and USDC revolver and a 15,000 BTC revolver,” Voyager said in a statement. The company added:

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As previously disclosed, the proceeds of the credit facility are intended to be used to safeguard customer assets in light of current market volatility and only if such use is needed.

Alameda Applies Certain Loan Conditions

Meanwhile, the news follows the crypto lender Blockfi securing a $250 million line of credit from FTX. Following the loan, a report published by the Wall Street Journal claims that FTX is discussing purchasing a stake in Blockfi. While Alameda is offering Voyager funds, there are some conditions that Voyager must abide by. For instance, “Alameda’s obligation to provide funding is subject to certain conditions, including: no more than US$75 million may be drawn down over any rolling 30-day period.” The loan agreement summary further adds:

[Voyager’s] corporate debt must be limited to approximately 25 percent of customer assets on the platform, less US $500 million; and additional sources of funding must be secured within 12 months.

Voyager still intends to pursue assets from 3AC and has been discussing the “legal remedies available.” The announcement notes that Voyager is “unable to assess at this point the amount it will be able to recover from 3AC.” On June 21, Voyager’s shares listed on TSX were trading for $1.23 per unit, and today, the stock is exchanging hands for $0.58 per unit. Additionally, Alameda indirectly holds 22,681,260 common shares of Voyager, equating to 11.56% of outstanding common and variable voting shares.

What do you think about Voyager securing a line of credit from Alameda? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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