June 9, 2023

Sam Bankman-Fried-led FTX and Binance are leading the race to acquire bankrupt crypto lender Voyager Digital and its related assets, according to various reports that emerged on Tuesday.

However, no proposal has been accepted so far, according to close sources.

Bid Details

According to sources, the current bid from Binance stands at $50 million and is slightly higher than the bid filed by FTX. Both Binance and FTX have emerged from the 2022 crypto market crash in relatively strong positions. This is in stark contrast to other players in the crypto space like Coinbase and BlockFi. Both were forced to cut costs significantly and their workforces were also reduced substantially to deal with the bear market.

Both companies have been able to significantly increase their market share during the pandemic. FTX has acquired several distressed entities especially in the last few years as it consolidated its position during the pandemic. Binance and FTX have not yet responded to requests for comment. Earlier this year, Voyager dropped an approach to FTX, describing it as a “low-ball bid dressed up as a white-knight rescue.”

History of Voyager

Voyager Digital was founded in 2019 and operated a crypto lending platform, paying users interest on customer deposits before lending assets to third parties. In 2019, Voyager Digital went public through a reverse merger, and at its peak, its market capitalization reached a staggering $3.9 billion.

However, at the time of its bankruptcy filing, the company stated that its total assets were worth $5 billion, while its liabilities were $4.9 billion. The auction of Voyager’s assets began on September 13th and included several bidders such as crypto investment manager Wave Financial along with trading platform Crosstower. However, as there is still time left for the winning bid to be announced, we can see that a new bidder has also entered the fray.

Dramatic collapse of Voyager

Voyager Digital filed for bankruptcy in July after the collapse and subsequent cryptocurrency sales saw an unprecedented number of withdrawal requests that completely drained the company’s reserves. At the time of bankruptcy, the company’s share price had fallen by 95%.

To mitigate the crisis, Voyager limited and then paused withdrawal requests because it was unable to meet withdrawal requests as it owed more than $1 billion to other companies. Of that number, half, or $650 million, was lent to Three Arrows Capital. Three Arrows Capital was ordered liquidated by a court after creditors sued the company. Another notable borrower was Alameda Research, also owned by Sam Bankman-Fried. At this time, Alameda Borrowed $377 million worth of crypto from Voyager.

Alameda also had a 9.5% equity stake in Voyager and extended two lines of credit to Voyager, one for $200 million in cash, and the other for 15,000 BTC. At the time of the bankruptcy, Alameda was its largest creditor, with $75 million in unsecured, outstanding debt.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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