Sam Bankman-Fried’s FTX may have been hailed as the savior of the crypto winter, but in the latest turn to its acquisition streak, the company has been accused of embezzling one of its bailouts.
Bankrupt crypto broker Voyager Digital has described a rescue deal proposed by FTX as “a low-ball offer disguised as a white knight bailout.” Documents submitted to the bankruptcy court in the Southern Borough of New York on Sunday evening.
Voyager said the joint proposal by FTX and Bankman-Fried’s fellow firm Alameda “was aimed at generating advertising for itself rather than creating value for Voyager’s customers.”
Voyager further claimed that the way the proposal was made, via a public press releasecould jeopardize a separate bidding process for the company’s assets, which takes place privately.
“The AlamedaFTX (sic) proposal is nothing more than a cryptocurrency liquidation on a basis that benefits AlamedaFTX,” the documents read.
Voyager filed for bankruptcy protection on July 5 of this year, while also laying out a plan to reorganize the company and return money to investors.
But it has also been exploring alternative proposals through discussions with more than 80 third-party investors and solicited expressions of interest from potential buyers through Friday.
Unpacking Voyager’s Court Claims
In the new filing, Voyager outlines several issues with FTX and Alameda’s proposal, including alleging that the bidder “openly disparaged” Voyager and included statements in its press release that were “highly misleading at best.”
A sticking point is Alameda and FTX’s claim that Voyager customers are entitled to a fixed amount based on the value of their wallets on July 5, when the exchange filed for Chapter 11 bankruptcy protection. But Voyager disagreed with that premise, saying its own plan to reorganize the company doesn’t limit customer claims in that way.
The bailout deal would also effectively eliminate the platform’s own VGX token, which Voyager estimates would immediately destroy $100 million.
Other issues raised include the tax burden on customers wishing to withdraw cash, as well as confusion that FTX has said the Voyager brand has no independent value but would demand a discount on its purchase price if the brand were sold to someone else.
FTX’s “White Knight” deals
Voyager is just one of a few struggling crypto firms FTX has eyed amidst the aftermath of the market downturn. Last month, the company acquired Canadian exchange Bitvo and is currently in the process of buying troubled lender BlockFi.
Bankman-Fried spoke from FTX’s “Responsibility” Stabilize the crypto ecosystem by intervening where possible, a concept also mentioned in FTX’s proposal to acquire Voyager’s digital assets and loans. In a document outlining the merits of the proposed transaction, Alameda and FTX said it was in their interest to show that “crypto businesses can be transacted like other financial institutions,” thereby boosting confidence in crypto as an asset class.
in one Twitter reply In Voyager’s recent court filing, Bankman-Fried described objections to FTX’s offer as “the ‘please give us an excuse to charge more for the property’ parade.”
Bankman-Fried added that the offer was motivated by a desire to get customers’ money back before it could be used up in the bankruptcy proceedings.
“Well, many parties have tried to bid $0.10 on the dollar for the assets,” he wrote. “If a customer had $100 on the platform, a third party would pay $10 for it, get the remaining credit (maybe $75), and then the customer gets…$10 back.
7) And in the meantime, Voyager’s advisors would slowly drain the remaining funds by charging fees every month while the bankruptcy process dragged on.
That didn’t seem right to us. Customers have already lost assets; we didn’t want them to lose any more.
Voyager has asked potential buyers to register their interest by Friday so they can determine if there’s a better alternative to their own plan.
In its proposal, FTX said it had no problem with this process continuing alongside discussions on its own bid for Voyager’s assets, and that Voyager could then decide whether to sign an agreement on its deal based on the other offers received.
If Voyager changes its tune and ultimately chooses FTX, according to FTX’s original schedule, the deal could close as early as this weekend.
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