Commenting on Voyager’s response to the proposal, FTX founder and CEO Sam-Bankman Fried said that only bankruptcy attorneys would benefit from the extension of the process, while customers “would get screwed“.
Voyager lawyers attack FTX buyout offer
In a press release, lawyers representing bankrupt crypto-currency exchange Voyager Digital responded to a proposed buyout by FTX to provide instant liquidity to Voyager customers by calling it “highly misleading and harmful“. “Alameda FTX’s proposal is nothing more than a liquidation of crypto-currencies on a basis that benefits Alameda FTX“, Voyager’s response reads. “It’s a low-ball offer disguised as a white knight rescue“.
In a statement sent on July 22, FTX proposed a deal to Voyager that would see Alameda Research purchase all of Voyager’s crypto assets and loans – with the exception of loans to bankrupt crypto hedge fund Three Arrows Capital – and use them to provide instant cash to customers affected by the bankruptcy. Under the buyout proposal, Voyager customers would be able to open FTX accounts and withdraw their share of the remaining assets in cash, while retaining their rights and claims in the proceedings. According to FTX, this would give Voyager’s customers a chance to receive immediate cash and avoid a bankruptcy proceeding that could last for years.
However, in their response yesterday to the proposal, Voyager’s bankruptcy lawyers said FTX’s proposal was designed to generate publicity for itself rather than value for the exchange’s customers. “By making its proposal publicly in a press release laden with misleading or outright false claims, Alameda FTX violated numerous obligations to the Debtors and the Bankruptcy Court“, reads the response, which further provides a list of reasons why the proposal “harms customers” while benefiting FTX.
Commenting on Voyager’s response to the buyout proposal on Twitter Monday, FTX founder and CEO Sam-Bankman Fried said. that the only party likely to benefit from the extension of the bankruptcy proceeding would be Voyager’s attorneys, not its clients.
3) Well, the *traditional* process is that before customers get their assets back, they get fucked.
First, there's a long, drawn out process, during which funds are frozen. It can take years.
Remember Mt. Gox? That process is *still going on*.
— SBF (@SBF_FTX) July 25, 2022
“Well, the *traditional* process is that before customers get their assets back, they get screwed“, he said. Unlike an outright liquidation, a restructuring process could last and keep clients’ funds frozen for years. In the meantime, he said, various bankruptcy agents bleed clients dry with advisory fees, which could ultimately add up to millions of dollars in costs by the time the process is over. “Consultants, for example, probably want the bankruptcy proceeding to last as long as possible in order to maximize their fees. Our offer would allow people to claim assets quickly“, he concludes.
Voyager filed for Chapter 11 – a type of voluntary bankruptcy proceeding that allows the company to restructure and continue to operate so it can eventually settle its obligations – on July 6, after Three Arrows Capital defaulted on a $665 million loan from the exchange. Three Arrows’ collapse sparked a series of liquidity crises and insolvencies across the industry, severely damaging companies like Celsius, blockchain.com and Digital Currency Group.