Binance, others bid for bankrupt Voyager after FTX crash

Voyager said it has approximately $1.3 billion worth of cryptocurrencies on its platform and holds more than $350 million in cash on behalf of clients of New York’s Metropolitan Commercial Bank.

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Binance and other cryptocurrency firms are preparing takeover bids for beleaguered digital currency lender Voyager Digital after FTX, which originally agreed to acquire the firm, filed for bankruptcy.

Voyager filed for Chapter 11 bankruptcy protection, which seeks to restructure ailing companies as profitable business operations, in July after cryptocurrency hedge fund Three Arrows Capital defaulted on a loan from the company valued at $670 million.

Voyager was to be acquired by FTX’s US unit, FTX US, for $1.4 billion after Sam Bankman-Fried’s company won in a US bankruptcy auction. It was then brought full circle after FTX itself filed for bankruptcy after experiencing a bank run-style increase in withdrawals.

Voyager’s customers have been unable to withdraw their funds since it suspended withdrawals due to an industry-wide liquidity crisis.

This week, Binance confirmed reports that its US subsidiary Binance.US intends to bid to save Voyager from collapse. Binance.US previously offered to buy Voyager as part of its bankruptcy auction.

Speaking on Bloomberg, Binance CEO Changpeng Zhao said that Binance.US “will make another offer for Voyager now, as FTX is no longer able to deliver on that commitment.”

Zhao has also set up a $1 billion fund aimed at supporting struggling companies in the industry.

CrossTower, a cryptocurrency and NFT trading platform, was among the parties that initially competed to buy Voyager in the judicial auction. The company says it intends to make a renewed offer for the company, though details are scarce for now.

CrossTower is “presenting a revised offering, which it believes will benefit both customers and the broader cryptocurrency community,” a CrossTower spokesperson told CNBC via email.

CrossTower is also planning its own separate industry recovery fund. The firm told CNBC that it does not see the fund as “competing” with Binance’s.

“It’s about stabilizing an industry, regaining trust and rebuilding what is likely the future of finance,” the CrossTower spokesman said.

“We will, with funds and talent, and we will partner with governments and policymakers and promote transparency. A venture fund didn’t build the tech industry, and a recovery fund isn’t going to rebuild this.”

Meanwhile, Wave Financial is also planning to make a new bid to acquire Voyager, after initially losing to FTX, according to a report in London’s Financial News newspaper.

Matteo Perruccio, president of International for Wave, declined to comment on the news when contacted by CNBC via WhatsApp. Last month, Perruccio told CNBC that his firm “felt that our offer was better for investors and debtors.”

Wave’s offering “saw us reinvigorate VGX,” Voyager’s token exchange, he said in the October interview.

Voyager’s customers are hoping any corporate bailout of the company includes VGX, a token created by Voyager as a kind of loyalty rewards program, offering discounts on trading fees.

“We also had some, I think, pretty smart ideas about how to drive traffic at a much lower cost of acquisition with a higher balance per customer, which were Voyager’s two big problems,” Perruccio told CNBC in October.

In August, Voyager suspended trading and transfers of VGX and outlined a plan to allow customers to exchange their tokens for new coins on a separate blockchain. The fate of the token, which has fallen more than 85% since the beginning of the year, remains unclear.

FTX US had offered to buy all VGX held by Voyager and its affiliates for $10 million. But Voyager said it was working on finding a “better and better solution” for the token that was compatible with FTX US’s offering.

FTX US is now part of bankruptcy proceedings in a Delaware court, along with its parent company and other affiliates including Alameda Research. The company’s offer was initially rejected by Voyager, which called it “a red flagged offer disguised as a white knight’s rescue.”

Another player caught up in the messy restructuring process is Ethos.io, a startup that Voyager acquired in 2019. Voyager only acquired Ethos.io’s technology, and the company is planning to bounce back as a separate brand after Voyager’s collapse.

Shingo Lavine, co-founder of Ethos.io, says his company’s technology was instrumental in helping Voyager develop its cryptographic capabilities. Voyager has seen significant growth after offering support for dogecoin, a meme-inspired digital currency, he added.

Adam Lavine, father of Shingo and fellow co-founder of Ethos.io, said the company has set up its own recovery program for VGX owners and Voyager creditors and has “seen a good response in the Voyager community so far.” .

So far, “several thousand users representing 10 percent of VGX’s total market capitalization” have joined the recovery initiative, Elder Lavine said. Voyager was not immediately available for comment when contacted by CNBC.

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