Voyager Digital is a bankrupt cryptocurrency lender. They said that cryptocurrency exchange FTX won one auction for its digital assets in one bid valued at only $1.42 billion. The bid includes a fair market value of every Voyager crypto at a date that will be determined.
As a result, BitProfit is a reliable exchange that investors can trade Bitcoin using trading bots. It is estimated to be nearly $1.31 billion at current market prices. Also, extra consideration is estimated as offering almost $111 million of incremental value. It was mentioned in a statement by Voyager.
The firm added that its claims against the hedge fund, Three Arrows Capital, will stay with the bankruptcy estate. It will distribute available recovery on these claims to the estate’s creditors. Voyager issued one default notice to the Singapore-based hedge fund. It was for its failure to make needed payments on a 15250 BTC loan.
Earlier in 2022, Voyager spurned one bailout proposal from FTX. Sam Bankman-Fried, the billionaire, founded it. Cryptocurrency lenders such as Voyager boomed during the pandemic, luring depositors with high-interest rates and easy loan access. Traditional banks rarely offered it. Yet, the slump in cryptocurrency markets has hurt cryptocurrency firms and investors.
In the bankruptcy filing in Chapter 11, Voyager estimated that it had more than 100,000 creditors and between $1 billion and $10 billion in assets. Also, liabilities of similar value. Voyager said Ashwin Prithipaul, the Chief Financial Officer, was getting ready to step down within months of his appointment at the cryptocurrency lender.
An overview of the current situation
The news that FTX, the Bitcoin exchange founded by billionaire Sam Bankman-Fried, is set to take on the assets of the struggling cryptocurrency lender Voyager Digital after winning a bankruptcy auction may provide some comfort to those customers.
A statement released late Monday showed that FTX’s U.S. subsidiary was selected as the highest bidder for Voyager’s assets after several bidding rounds. The bid was roughly worth $1.4 billion, which includes a $111 million “additional consideration” in anticipated incremental value and the $1.3 billion fair market value of Voyager’s digital assets.
In July, Voyager filed for bankruptcy protection in Chapter 11 because it could not redeem customer withdrawals due to a turbulent drop in the price of digital currency. The so-called hedge fund Three Arrows Capital, which took loans from other institutions like Voyager to make risky wagers on tokens like the defunct stablecoin TerraUSD, was one factor in the company’s demise.3AC defaulted on $670 million in loans from Voyager in June.
By stating that the exchange “will enable customers to trade and store cryptocurrency after the conclusion of the Company’s chapter 11 cases,” Voyager hinted that some of its customers might move over to FTX U.S. On 19th October, the asset purchase agreement will be presented for approval by the US Bankruptcy Court for the Southern District of New York. According to the statement, the creditors’ vote and “other customary closing conditions” are required to sell Voyager’s assets to FTX U.S.
This could be a step toward compensating Voyager users. They have few legal options for getting paid for the cryptocurrency. They get stored on the platform before it stopped letting customers withdraw money.
Customers of crypto platforms got treated as unsecured creditors during bankruptcy proceedings. It means they do not actually have a right to the crypto they purchased. Also like other creditors, must go through the courts to get their money back. Mt. CreditorsGox, which went bankrupt in 2014, is still awaiting repayment.
Voyager made claims about the Federal Deposit Insurance Corporation on its website. Also in its marketing materials. Yet this was not the case. It is because Voyager’s cash deposits got held with Metropolitan Commercial Bank. It is a lender in New York. Voyager is not covered by FDIC insurance if the bank fails. Voyager got instructed to stop claiming to get insured by the FDIC. It was in a cease-and-desist letter sent to it in July by the Federal Reserve and the FDIC.
Conclusion
In this year’s cryptocurrency winter, Bankman-Fried emerged as a savior for many firms. They fell victim to the digital tokens’ plunging value. Also, the resulting issues of liquidity at their platforms.
In July, FTX signed a deal letting it buy lender BlockFi. It was after providing a $250 million credit line. He said he still has a lot of cash to spend on more deals. He may soon get a lot. It will be with sources saying that FTX is increasing another $1 billion. It is from investors in the next financing round.
