Bankruptcy Cryptocurrency Lender Voyager to Sell Assets to Sam Bankman-Fried’s FTX

Sam Bankman-Fried, founder and chief executive officer of Cryptocurrency Derivatives Exchange FTX, said during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, U.S., on Wednesday, August 17, 2022.

Jeenah Moon | Bloomberg | beautiful pictures

Customers of crypto lender Voyager Digital can find solace in knowing that FTX, the bitcoin exchange founded by billionaire Sam Bankman-Fried, will take over the company’s assets later. winning a bankruptcy auction.

After several rounds of bidding, FTX’s US subsidiary has been selected as the highest bidder for Voyager’s assets, the companies said in a statement late Monday. The bid is valued at around $1.4 billion, a figure that includes $1.3 billion for the fair market value of Voyager’s digital assets, plus $111 million “additional considerations.” additional” in terms of expected value-added.

Voyager filed for Chapter 11 bankruptcy protection in July after a dramatic drop in the price of the digital currency made it impossible for it to exchange withdrawals from its customers. The company’s downfall stemmed in part from the collapse of Three Arrows Capital, a hedge fund known as a hedge fund that took out loans from other institutions, like Voyager, to take on ventures. risk on tokens – including stablecoin terraUSD crashing. In June, 3AC defaulted on a loan from Voyager worth $670 million.

Voyager hinted at the possibility of converting its clients to FTX US, saying that the exchange “will allow customers to trade and store cryptocurrencies after the conclusion of the Company’s chapter 11 cases.” The asset purchase agreement will be submitted to the United States Bankruptcy Court for the Southern District of New York for approval on October 19. Voyager’s sale of assets to FTX US is subject to a vote by owners. debt, as well as “other customary closing conditions,” according to the statement.

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The move marks a potential step toward compensating Voyager users, who had few legal ways to get paid for the crypto they had stored on the platform before customer withdrawals were frozen. . In bankruptcy proceedings, customers of crypto platforms are treated as unsecured creditors, which means they are not actually entitled to receive the cryptocurrency they have purchased and like other creditors will. need to go through the courts to try to get their money back. The creditors of Mt.Gox, which operated in 2014, are still waiting to be repaid.

Voyager has previously stated on its website and in marketing materials that users’ funds are protected by the Federal Deposit Insurance Corporation, but technically this is not true – deposits Voyager’s assets are held at Metropolitan Bank of Commerce, a New York-based lending company. FDIC insurance only covers bank failure, not Voyager ships. In July, the FDIC and the Federal Reserve sent Voyager a cease-and-desist letter ordered it to stop claiming it was FDIC-insured.

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In the crypto winter of 2022, Bankman-Fried has emerged as a savior for many companies that have fallen victim to the falling value of digital tokens and led to liquidity problems on their platforms. 30-year-old crypto-diplomat turned quantum trader shop for cheap amid the recent carnage of the industry.

In July, FTX signed an agreement giving it the option to buy BlockFi from a lender after offering a $250 million line of credit. Bankman-Fried says he still has plenty of cash left to spend on follow-up transactions. And he’s likely to get more soon, with sources telling CNBC that FTX is raise another 1 billion dollars from investors in an upcoming funding round.

CNBC’s Kate Rooney contributed to this report.

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