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Voyager Lawyers Clash With Bankman-Fried Over ‘Low Ball’ Buyout Offer


blockworks.co 25 July 2022 05:55, UTC
Reading time: ~3 m

Bankruptcy lawyers representing cryptocurrency lender Voyager Digital have slammed a buyout proposal spearheaded by Sam Bankman-Fried’s companies, claiming the offer made several “false and misleading assertions” that violated both debtors and the bankruptcy court.

Voyager Digital responded to a joint offer from Bankman-Fried’s FTX and Alameda Research Ventures (Alameda/FTX) in a court filing lodged Sunday, calling it a “low-ball bid” that would give the crypto billionaire’s businesses an upper hand.

The public proposal emerged in a press release on Friday, which showed FTX and Alameda Ventures’ parent companies offering to buy Voyager’s remaining digital assets and loans, leaving out those made to defunct hedge fund firm Three Arrows Capital (3AC).

Under the same offer, FTX would allow Voyager customers to receive a share of their claims — if they signed up for an FTX account. 

“The Alameda/FTX proposal is nothing more than a liquidation of cryptocurrency on a basis that advantages Alameda/FTX,” lawyers from Kirkland & Ellis wrote. “It’s a low-ball bid dressed up as a white knight rescue.”

Voyager said it would entertain “any serious proposal” made under its bidding procedures, while the joint offer from Bankman-Fried’s firms “was designed to generate publicity” rather than provide value to customers, they added.

Voyager’s lawyers also said the proposal harms customers as it ignores tax consequences, eliminates the firm’s VGX token (which it appraises at $100 million) and declares no value in the Voyager platform or intellectual property. 

“Alameda/FTX’s proposal purports to allow customers to be ‘long crypto’ while receiving cash on account of their claim. But all Alameda/FTX’s proposal actually does is buy customers’ claims at a discount,” they wrote.

Sam Bankman-Fried hits back at Voyager lawyers

In a Twitter thread late Sunday, FTX CEO Bankman-Fried suggested Voyager’s customer funds could be frozen for years, as bankruptcy proceedings often take that long to resolve. “Remember Mt. Gox? That process is still going on,” he tweeted.

Bankman-Fried added: “Voyager’s consultants would be slowly draining the remaining funds by charging fees every month the bankruptcy process dragged on. This didn’t seem right to us. Customers already lost assets; we didn’t want them to lose more.”

Voyager filed for bankruptcy on July 5, days after freezing withdrawals on its platform. This was despite Alameda providing the firm with $500 million in a bid to relieve its financial stress caused by a bad loan to 3AC.

9) It would let customers–if they chose–get the remaining assets back right away, with no fees or additional haircut.

— SBF (@SBF_FTX) July 25, 2022

The deal resulted in Bankman-Fried and Alameda retaining a combined 11% stake in Voyager Digital, more than any other shareholder. Alameda is also Voyager’s second-biggest borrower — owing the lender $377 million according to bankruptcy documents (Voyager also owes Alameda $75 million).

Voyager’s lawyers ended their filing with a scathing rebuke of Bankman-Fried’s companies, stating the company reserves all rights and remedies “for [Alameda and FTX’s] clear and intentional subversion of the bankruptcy process and the damages that may be suffered by customers and other creditors as a result.”

They also addressed speculation that Alameda and FTX had an “inside track” to acquire Voyager, based on “some type of sweetheart transaction terms.” 

“Nothing could be further from the truth as evidenced by this response,” they said. “Voyager’s process will not be obstructed by anyone, including Alameda/FTX.”

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