Voyager says FTX’s buyout offer was deceptively ‘low bid’, SBF fires back

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

Voyager Lawers hits back at FTX’s buyout offer

Voyager Digital’s lawyers and FTX’s Sam-Bankman Fried have gone into public discussion about Voyager’s bankruptcy.

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

In a press release published on July 22, FTX Voyager offered a deal that would have Alameda Research buy all of Voyager’s crypto assets and loans — excluding loans to bankrupt crypto hedge fund Three Arrows Capital — and use them to provide immediate liquidity to customers affected by the bankruptcy. Under the acquisition proposal, Voyager customers will be able to 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 will give Voyager customers a chance to immediately receive some liquidity and opt out of bankruptcy proceedings that could drag on for years and expose them to risk.

But 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 clients. “By announcing its proposal in a press release filled with misleading or outright false claims, AlamedaFTX violated numerous obligations to debtors and the bankruptcy court,” the response said, further outlining a list of reasons why the proposal “harms customers” while to advantage. FTX.

FTX founder and CEO Sam-Bankman Fried commented on Voyager’s response to the acquisition proposal on Twitter on Monday. so that the only party who could benefit from extending the bankruptcy proceedings would be Voyager’s lawyers – not the customers.

3) Well, the *traditional* process is that before the customers get their assets back, they get screwed.

Firstly, it is a long, drawn-out process, where the funds are frozen. It can take years.

Do you remember Mt. Gox? That process is *still* ongoing.

— SBF (@SBF_FTX) 25 July 2022

“Well, the *traditional* process is that before the customers get their assets back, they get screwed,” he said. Unlike simple liquidation, a restructuring process can last and keep customers’ funds frozen for years. In the meantime, he said, various bankruptcy agents would bleed clients dry with consulting fees, which could eventually add up to millions of dollars in costs when the proceedings are finished. “The advisers, for example, are likely to want the bankruptcy process to drag out as long as possible, maximizing their fees. Our offer would allow people to claim assets quickly,” he concluded.

Voyager filed for Chapter 11 — a type of voluntary bankruptcy proceeding that allows the company to restructure and continue operating to eventually settle its liabilities — on July 6, after Three Arrows Capital defaulted on a $665 million loan from the stock exchange. Three Arrows’ explosion created a ripple of liquidity crises and insolvency throughout the industry, severely damaging companies such as Celsius, blockchain.com and Digital Currency Group.

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