Voyager’s attorneys appear to be disturbed by the buyout offer from Alameda and FTX since they do not consider it to be a legitimate one that would help its consumers.
As a result of the actions being “not value-maximizing” and perhaps “harming clients,” centralized crypto lender Voyager Digital Holdings has rejected an offer from FTX and its investment arm Alameda Ventures to buy out its digital assets.
Voyager’s attorneys rejected the offer made public by FTX, FTX US, and Alameda on Friday to buy out all of Voyager’s assets and outstanding loans, with the exception of the defaulted loan to Three Arrows Capital, in a rejection letter submitted to the court on Sunday as part of its ongoing bankruptcy proceedings (3AC).
The letter claims that by undermining “a coordinated, private, competitive bidding process,” making such proposals public might put other possible acquisitions in jeopardy. It also claims that “AlamedaFTX breached various responsibilities 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 crypto hedge fund 3AC missed payments on a $650 million loan from the company, Voyager filed for bankruptcy on July 5 in the Southern District of New York for insolvency totaling more than $1 billion.
A deal was presented to Voyager by the three businesses connected to FTX CEO Sam Bankman-Fried on Friday. Under the terms of the agreement, Alameda would take over all of Voyager’s assets and use FTX or FTX US to sell and distribute them proportionally to users who would be impacted by the bankruptcy.
According to Bankman-suggestion, Fried’s users of Voyager might recoup their losses and leave the platform, according to FTX’s news release:
“Voyager’s customers did not choose to be bankruptcy investors holding unsecured claims. The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business.”
Bankman-Fried reiterated his company’s justification for its acquisition proposal for Voyager in a late-Sunday Twitter conversation. He said that because bankruptcy processes “may take years,” Voyager’s customers had “gone through enough already” and should be entitled to retrieve their assets as quickly as possible.
The transaction, which claims to compensate Voyager customers, is basically merely a liquidation of Voyager’s assets, according to the lawyers for the company on Sunday, “on a premise that benefits AlamedaFTX.”
Additionally, it listed six potential “harms” that the proposal could cause, such as 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 abolition of the VGX token, which would “destroy in excess of $100 million in value immediately:
“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.”
In addition, the letter denied rumors that AlamedaFTX had a better chance of succeeding in takeover offers because of continued ties between the two businesses, claiming that “nothing could be farther from the truth as indicated by this answer.”
In the midst of a severe bear market, Bankman-Fried has been at the heart of additional purchase discussions. On July 1, BlockFi’s CEO Zac Prince negotiated an agreement with FTX under which the company would get a credit line of $240 million with a $640 million buyout option.
For FTX and FTX US, Bankman-Fried was looking for $400 million in fundraising on July 20 in order to raise their respective values to $32 billion and $8 billion. The fresh fundraising rounds are anticipated to aid in the purchases of further crypto companies.