FTX has bid $1.4 billion for Voyager Digital’s assets, looking to provide users a way out if they move to it
FTX has bid $1.4 billion for Voyager Digital’s assets, looking to provide users a way out if they move to its platform, but there are risks.
In September, cryptocurrency exchange FTX US secured the winning bid for the assets of embattled crypto brokerage firm Voyager Digital with a bid of approximately $1.4 billion. The bid was made up of the fair market value of Voyager’s crypto holdings “at a to-be-determined date in the future.”
According to Voyager, at current market prices, the fair value of its holdings was estimated around $1.3 billion, and the deal included an “additional consideration,” estimated to be worth approximately $111 million.
Since then, new details on the case have emerged, with court filings showing that the cash paid for Voyager Digital itself was only $51 million. The $1.31 billion FTX offered for Voyager crypto holdings are set to be distributed to eligible credits on a pro-rata basis, according to the filings.
The $111 million included in the deal are, as a result, split between the $51 million being paid for Voyager’s assets, intellectual property and user base, and the $60 million that consists of an accumulated $50 account credit for each user who onboards with FEX and a $20 million earnout.
Voyager’s users search for answers
While news of FTX’s winning bid trickles in through court documents and other scarce sources, users of the bankrupt firm keep on searching for answers, organizing through social media to accumulate as much information as possible.
Initial math done by users taking Voyager’s balance sheet into account has suggested that users who move on to FTX can expect to get a haircut of over 30% on the assets they held. To some, seeing any type of return is better than seeing nothing after the platform went under.
FTX’s CEO Sam Bankman-Fried has said that its bids were “generally determined by fair market price,” with the company buying up assets to give them back to customers.
to be clear — in Voyager, our bids are generally determined by fair market price, no discounts; goal isn't to make money buying assets at cents on the dollar, it's to pay $1 on the $1 and get the $1 back to customers.
If we were to get involved in Celsius, it would be the same.
— SBF (@SBF_FTX) October 2, 2022
Voyager’s problems emerged after the firm extended a loan of $670 million to crypto hedge fund Three Arrows Capital, which defaulted in late June. FTX’s bid excluded the Three Arrows Capital loan.
As it stands, it seems users who will receive their assets back will have to flock to FTX’s trading platforms if the court approves the deal. The Voyager app would, as a result, reach its end while FTX’s user base would swell significantly.
Recent: Is payments giant SWIFT preparing for a blockchain-bound future?
To users who may soon be moving to FTX, there are a few concerns that they need to be aware of if they choose to stay on the new platform.
FTX offers its users an earn program that allows them to earn interest on their cryptocurrency holdings, albeit with annual percentage yields (APYs) that are usually lower than those users were getting on other crypto lending platforms, including Voyager.
FDIC insurance snafu
Before Voyager Digital went under, regulators directed it to remove “false and misleading statements” that its users’ deposits were insured by the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) as if they were regular savings accounts.
In a joint letter, Seth Rosebrock and Jason Gonzalez, assistant general counsel at the FDIC, suggested that Voyager’s representations “likely misled and were relied upon” by customers placing funds on the platform.
While FTX has been seen as a beacon of hope attempting to backstop contagion in the cryptocurrency industry after a run for liquidity led to the collapse of several firms, the FDIC also warned it to stop making “misleading” statements regarding the insurance status of users’ deposits.
FTX received a cease-and-desist letter from the FDIC to stop suggesting user funds on the platform were insured. The letter specified that Brett Harrison, the president of FTX US, said in a tweet that direct deposits from employers were stored in FDIC-insured accounts in users’ names.
While Harrison responded on social media by saying that he deleted the post and didn’t mean to indicate that cryptocurrencies stored in FTX are insured by the FDIC, his statements could have misled users flocking for safety.
Contagion risks
As users move to FTX either because they enjoy the platform, want to diversify from Binance or Coinbase or want the ability to earn interest on their tokens, the company grows.
It’s unclear whether FTX’s attempts to backstop contagion in the cryptocurrency space could be leaving the exchange itself vulnerable, although experts believe what it’s doing is…
cointelegraph.com