Crypto Exchange FTX to Buy Bankrupt Voyager

Crypto exchange FTX has acquired bankrupt crypto lender Voyager for $1.42 billion. The crypto exchange won in an auction to purchase Voyager's assets against competing crypto investment firm Wave Financial. The move comes after Voyager rejected FTX's bailout proposal earlier this year.

Voyager said in a press release late Monday night that FTX US's bid is valued at approximately $1.42 billion and is comprised of the fair market value of all Voyager cryptocurrency at a to-be-determined date in the future, which at current market prices is estimated to be $1.311 billion, plus additional consideration that is calculated as providing approximately $111 million of incremental value.

The Downfall of Voyager

In July 2022, Voyager filed for Chapter 11 bankruptcy protection after the $2 trillion crypto market crash rendered it unable to honor withdrawals from its user base. Voyager's crash was also prompted partially from the collapse of Three Arrows Capital (3AC). 3AC functioned as a hedge fund that serviced loans from other institutions, one such being Voyager, to make risky gambles on tokens. Its portfolio included bets on the collapsed stablecoin TerraUSD and defaulted on borrowings from Voyager worth $670 million.

Up until its downfall, Voyager had been claiming that investors’ funds were protected by the Federal Deposit Insurance Corp. (FDIC), but this turned out not to be the case. Voyager’s cash deposits are kept with Metropolitan Commercial Bank, a New York-based lender, and FDIC insurance only covers the event of failure of the bank, not Voyager.

FTX To The Rescue

FTX's move to purchase Voyager's assets shows promising movement toward compensating users of Voyager, who have few legal avenues in securing the crypto they lost in the platform's crash. Voyager has nodded to a possible transition of its customers over to FTX U.S., saying the exchange “will enable customers to trade and store cryptocurrency after the conclusion of the Company’s chapter 11 cases.”

Voyager's users can look forward to Oct. 19 as the asset purchase deal will be presented to the U.S. Bankruptcy Court for the Southern District of New York for approval. The sale of Voyager’s assets to FTX is dependent on a vote by creditors, as well as “other customary closing conditions,” according to the press release.

The Bottom Line

Since the crypto crash in early 2022, FTX's CEO, Sam Bankman-Fried, has been purchasing a variety of crypto firms that suffered devastating losses. For instance, in July, FTX signed a deal that gave it an option to buy crypto lender BlockFi after providing it with a $250 million line of credit. The 30-year-old Bankman-Fried isn't stopping there. The crypto tycoon says he still has plenty of cash to spend on further deals.