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Voyager’s lawyers condemned the Alameda buyout offer as it ‘harms customers’

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  • July 25, 2022
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The merger proposal from Alameda and FTX seems to have upset Voyager’s lawyers, who do not think it would benefit the users.

Centralized crypto lender Voyager Digital Holdings has rejected an offer from FTX and its investment arm Alameda Ventures to take over its digital assets because the actions “are not value-maximizing” and potentially “harm customers.” 

They filed a rejection letter in court on July 24 as part of its ongoing bankruptcy proceedings, Voyager’s lawyers condemned the offer made public by FTX, FTX US, and Alameda on July 22 to buy out all of Voyager’s assets and outstanding loans – excluding the defaulted loan to 3AC.

The letter claims that making such offers public could risk any other potential deals by destabilizing “a coordinated, confidential, competitive bidding process,” adding “AlamedaFTX violated many obligations to the Debtors and the Bankruptcy Court.”

Voyager’s legislatures recommended that their proposed strategy to reorganize the company is better. They say it would promptly deliver all of their customers’ cash and as much of their crypto as possible.

On July 5 Voyager filed for bankruptcy for insolvency worth more than $1 billion in the Southern District of New York after crypto hedge fund Three Arrows Capital (3AC) defaulted on a $650 million loan from the firm.

The three companies tied to FTX CEO Sam Bankman-Fried offered Voyager a deal that would see Alameda would assume all of Voyager’s assets and use FTX or FTX US to sell and disperse them proportionally to users affected by the bankruptcy on July 22,

In FTX’s press release, Bankman-Fried proposed a way for Voyager users to recover their losses and move on from the platform.

Bankman-Fried doubled down on his firm’s reasoning for proposing to attain Voyager in a tweet late on July 24. He stated that Voyager’s customers have “been through enough already” and should be able to claim their assets if they want them sooner than later because bankruptcy proceedings “can take years.”

On Sunday, Voyager’s lawyers claimed that the deal, which implies making Voyager users whole, is essentially just a liquidation of Voyager’s assets “on the basis that advantages AlamedaFTX.”

It also planned six ways in which the proposal could “harm customers”, including capital gains tax consequences, unfairly capping the value of each Voyager user’s account at their July 5 value, and the current exclusion of the VGX token, which would “destroy more than $100 million in value immediately.”

The letter also contested the theory that AlamedaFTX had a greater chance of winning acquisition bids due to ongoing relationships between the two firms, stating: “Nothing could be further from the truth as evidenced by this response.”

Bankman-Fried has been at the midpoint of other acquisition talks in the middle of a dramatic bear market. The CEO of another centralized crypto lender BlockFi’s Zac Prince signed a deal for FTX to send $240 million in credit to the firm, on July 1, with a takeover option worth $640 million.

 Cointelegraph reported on July 20, that Bankman-Fried was seeking $400 million in funding for FTX and FTX US to bring their valuations to $32 billion and $8 billion correspondingly. The new funding rounds are anticipated to support acquisitions of other crypto firms.


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