Voyager Says FTX’s Takeover Offer Was Misleading “Low Bid”, SBF Fires Back

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Key points to remember

  • Voyager’s bankruptcy attorneys responded to FTX’s takeover proposal to buy the exchange’s assets and give customers instant cash by describing the offer as harmful and highly misleading.
  • Sam-Bankman Fried responded by saying the lawyers are only against the liquidation proposal because they want to drain Voyager’s remaining funds by charging a fee.
  • Voyager filed for Chapter 11 bankruptcy on July 6 after infamous crypto hedge fund Three Arrows Capital plunged the exchange into an insolvency crisis by defaulting on a $665 million loan.

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Commenting on Voyager’s response to the proposal, FTX Founder and CEO Sam-Bankman Fried said only bankruptcy attorneys would benefit from dragging out proceedings, while clients “get screwed.”

Voyager Lawers Rejects FTX Takeover Offer

Attorneys for Voyager Digital and FTX’s Sam-Bankman Fried have begun a public spat over Voyager’s bankruptcy.

In a court filing on Sunday, lawyers representing bankrupt cryptocurrency exchange Voyager Digital responded to a takeover bid by shareholder and rival firm FTX to offer instant liquidity to Voyager customers in calling it “very misleading” and harmful. “AlamedaFTX’s proposal is nothing more than a liquidation of cryptocurrency on a basis that benefits AlamedaFTX,” Voyager’s response reads. “It’s a low offer disguised as a white knight rescue.”

In a July 22 press release, FTX offered Voyager a deal that would see Alameda Research buy all of Voyager’s crypto assets and loans — excluding loans to bankrupt crypto hedge fund Three Arrows Capital — and use to provide instant cash to customers affected by bankruptcy. Under the takeover proposal, Voyager customers could open FTX accounts and withdraw their share of the remaining assets in cash while retaining their rights and claims in the proceedings. According to FTX, this would give Voyager customers a chance to receive immediate cash and opt out of bankruptcy proceedings that could take years and put them at risk.

However, in yesterday’s response to the proposal, Voyager’s bankruptcy attorneys said FTX’s proposal was designed to generate publicity for itself rather than value for the exchange’s customers. “By publicly making its proposal in a press release laden with misleading or outright false allegations, AlamedaFTX violated numerous obligations to debtors and the bankruptcy court,” the response reads, further outlining a list of reasons. why the proposal “harms customers” while benefiting FTX.

Commenting on Voyager’s response to the proposed takeover on Twitter on Monday, FTX Founder and CEO Sam-Bankman Fried said that the only party likely to benefit from the extension of the bankruptcy proceedings would be Voyager’s lawyers, not its clients.

“Well, the *traditional* process is that before clients get their assets back, they get fucked,” he said. Unlike a simple liquidation, a restructuring process could drag on and freeze client funds for years. In the meantime, he said, various bankruptcy agents would bleed clients dry with consulting fees, which could potentially amount to millions of dollars in costs by the time the proceedings are completed. “Consultants, for example, probably want the bankruptcy process to drag out as long as possible, maximizing their fees. Our offer would allow people to quickly claim assets,” he concluded.

Voyager filed for Chapter 11 – a type of voluntary bankruptcy proceeding that allows the company to restructure and continue operating in order to eventually settle its obligations – on July 6, after Three Arrows Capital defaulted on a $665 million loan from the stock exchange. The Three Arrows explosion created a wave of liquidity and insolvency crises across the industry, severely hurting companies like Celsius, blockchain.com and the Digital Currency Group.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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