Krypto: Customers of bankrupt lenders can soon get their money back
This is an unusual offer.
But it’s a proposal that is likely to bring hearty comfort to customers of bankrupt crypto lender Voyager Digital.
The latter had in fact lost hope of recovering its assets/funds after the crypto lender, victim of a loan default by hedge fund Three Arrows Capital, or 3AC, filed for Chapter 11 bankruptcy at the beginning of the month.
According to official documents from Voyager Digital, retail investors are not at the top of the list of secured creditors. Their claims are considered unsecured, meaning they are not sure they will ever be able to get their money back.
But an unusual event has just occurred. Young crypto-billionaire Sam Bankman-Fried, founder of crypto exchange FTX.com, is proposing a restructuring plan aimed at allowing Voyager Digital customers to get some of their money back. The advantage of this proposal is that it will attract these customers to FTX.com at the same time.
Early access to their liquidity
In fact, the offer is in two parts. Alameda, a trading firm owned by Bankman-Fried, would buy all of Voyager Digital’s assets in cash, including loans except those made to failing hedge fund 3AC.
Meanwhile, FTX, Bankman-Fried’s cryptocurrency trading platform, will offer Voyager Digital customers the opportunity to receive their funds early by opening an account on FTX. Any Voyager Digital customer who does not wish to open an account with FTX retains his rights in the bankruptcy proceedings, but will not receive early cash on his claims through FTX.
The offer is non-binding and has not yet been accepted by Voyager Digital.
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“Under the joint proposal, customers of Voyager will have the option to open a new account with FTX with an opening balance funded by an early distribution of a portion of their bankruptcy claims,” explains FTX in a recent press release that you can find here.
“Clients will be able to withdraw their cash immediately, or use it to purchase digital assets on the FTX platform. No client is required to participate, and participation in the joint proposal is entirely voluntary,” the firm adds.
Alameda had already provided a $75 million line of credit to Voyager Digital before the firm filed for bankruptcy. As part of the new offer, Alameda will delete this requirement.
It is a kind of win-win formula because the offer gives a positive and saving image to Bankman-Fried and FTX, which will also allow it to win new customers. The offering is also an ideal advertisement for FTX at a time when distrust of the cryptocurrency industry is returning. They will be seen as the “good guys”.
Bankman-Fried Power continues to grow
“Voyager’s clients did not choose to be bankruptcy investors with unsecured claims,” said Sam Bankman-Fried, CEO of FTX. “The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business – a way that allows clients to get early liquidity and reclaim part of their assets without forcing them to speculate on bankruptcy outcomes and unilaterally take risk.”
Since the beginning of the liquidity crisis that the crypto industry is currently going through, Bankman-Fried has established itself as the new savior, much like JPMorgan Chase bank at the time of the financial crisis in 2008. The bank has thus expanded its power by raising funds. out crypto lender BlockFi, which gave it an option to buy the platform. FTX is in talks to buy Bithumb, a South Korean cryptocurrency exchange.
Bankman-Fried also became one of Robinhood’s largest shareholders. And the young 30-year-old billionaire does not intend to stop there. He wants to continue to expand his power over an industry that nevertheless likes to portray itself as decentralized in opposition to the traditional financial system.
“We could certainly see ourselves spending a number of hundreds of millions beyond what we have so far, and in some cases more than that,” Bankman-Fried told CNBC on July 22.
To finance its ambitions, FTX is in discussions to raise new funds, according to Bloomberg News.
