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Crypto Crash: Voyager lawyers see FTX/Alameda offer as ‘low-ball bid dressed up as a white knight’

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On Friday, Sam Bankman-Fried’s companies FTX, FTX.US and Alameda Ventures made a joint offer for some of the assets of Voyager Digital, which is currently in Chapter 11. Voyager Digital was impacted by a $650 million loan to Three Arrows Capital (3AC) which went bankrupt. While the Alameda/FTX offer would allow Voyager customers to access some cash quickly, Voyager’s lawyers argue that it favors FTX and Alameda more. “It’s a low-ball bid dressed up as a white knight rescue,” said Voyager’s lawyers Kirkland and Ellis in a response.

FTX would take the current crypto balance, convert it to dollars as of the bankruptcy date on July 5, and distribute it on the FTX platform proportionately to Voyager clients. Customers can withdraw the cash or re-invest in crypto.

Why is Alameda/FTX offering cash rather than crypto?

The white knight pointed out that with the ongoing bankruptcy proceedings, customers are still exposed to downside crypto price risk. However, Alameda/FTX emphasized urgency, and it’s worth noting that as of today, Alameda/FTX would be making a quick 10% profit on the $1.3 billion of assets on the Voyager platform at that date. On Friday, the figure would have been closer to 15%, presenting a winning position for Alameda/FTX. Does anyone want to bet whether Alameda has hedged the price?

If instead, Alameda/FTX had offered to give Voyager customers the equivalent in cryptocurrency, the customers would not be subject to taxes for liquidating their assets at the dollar amount. But it also wouldn’t yield a current profit for Alameda/FTX.

The offer by Alameda/FTX says it will write off the recent $75 million loan to Voyager. But Voyager’s lawyers responded that customer claims rank higher than the loan anyway. 

There’s validity to some of the assertions by both sides. The deadline for bids was this coming Friday. By publicly submitting an offer a week early, it will likely influence the process, chilling the bidding process, according to Kirkland and Ellis. On that point, Alameda/FTX also publicly claimed that the intellectual property of Voyager Digital is worthless. 

With the Kirkland and Ellis Voyager process, customers might stand to get something from the claims against Three Arrows Capital (3AC). And also potentially from the Voyager digital currency, which has a market capitalization of more than $100 million. But they would have to wait. 

However, a point made early on in the Kirkland and Ellis letter is a bit of an own goal. “AlamedaFTX essentially proposes a liquidation where FTX serves the role of liquidator,” it says. It doesn’t mention that as Voyager lawyers, this might impact its fees and make the process cheaper.

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