Crypto Crash: Voyager Lawyers See FTX/Alameda Offer as ‘Low Bid Dressed as a White Knight’ – Ledger Insights
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 affected by a $650 million loan to Three Arrows Capital ( 3AC) which went bankrupt. While the Alameda/FTX offer would allow Voyager customers to access 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,” Voyager’s lawyers Kirkland and Ellis said in a response.
FTX would take the current crypto balance, convert it to dollars as of the July 5 bankruptcy date, and distribute it on the FTX platform proportionally to Voyager customers. Customers can withdraw cash or re-invest in crypto.
Why does Alameda/FTX offer cash instead of 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 its urgency, and it is worth noting that starting today, Alameda/FTX will earn a quick 10% profit on $1.3 billion of Voyager platform assets on that date. On Friday, the number would be closer to 15%, presenting a winning position for Alameda/FTX. Anyone want to bet on whether Alameda has secured the prize?
If Alameda/FTX had instead offered to give Voyager customers the equivalent in cryptocurrency, the customers would not be taxed to liquidate their assets at the dollar amount. But it also wouldn’t produce a current profit for Alameda/FTX.
The Alameda/FTX offer 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 is validity to some of the claims from both sides. The offer deadline was next Friday. Making an offer publicly a week early is likely to affect the process, cooling the bidding process, according to Kirkland and Ellis. On that point, Alameda/FTX also publicly claimed that Voyager Digital’s intellectual property is worthless.
With the Kirkland and Ellis Voyager process, clients can stand to get something from their claims against Three Arrows Capital (3AC). And also potentially from the digital currency Voyager, which has a market value of more than 100 million dollars. But they had to wait.
However, a point made early in the Kirkland and Ellis letter is a bit of a goal in itself. “AlamedaFTX is essentially proposing a liquidation with FTX serving the role of liquidator,” it said. It does not mention that as Voyager lawyers this may affect the fees and make the process cheaper.
