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Bids Pour in for Bankrupt Voyager Digital from Binance and Other Crypto Firms after FTX Collapse

Binance and other cryptocurrency firms are preparing takeover offers for the beleaguered digital currency lender Voyager Digital. This comes after FTX, which had initially agreed to acquire the firm, filed for bankruptcy.

November 25, 2022
10 minutes
minute read

Binance and other cryptocurrency firms are preparing takeover offers for the beleaguered digital currency lender Voyager Digital. This comes after FTX, which had initially agreed to acquire the firm, filed for bankruptcy.

Voyager filed for Chapter 11 bankruptcy protection in July after crypto hedge fund Three Arrows Capital defaulted on a loan from the company worth $670 million. Chapter 11 bankruptcy protection allows troubled firms to restructure as viable business operations.

Voyager was set to be acquired by FTX's American unit, FTX U.S., for $1.4 billion after Sam Bankman-Fried's firm won in a U.S. bankruptcy auction. However, FTX itself filed for bankruptcy after experiencing its own bank run-style surge in withdrawals, throwing the Voyager acquisition back to square one.

Since Voyager paused withdrawals amid an industry-wide liquidity crisis, customers have been unable to get their funds out.

This week, Binance confirmed reports that its U.S. subsidiary Binance.US plans to make an offer to rescue Voyager from collapse. Binance.US had previously offered to buy Voyager as part of its insolvency auction. Binance.US is committed to helping Voyager find a way to stay afloat and continue serving its customers.

Binance CEO Changpeng Zhao said on Bloomberg that Binance.US will make another bid for Voyager now that FTX is no longer able to follow through on its commitment. Zhao has also set up a fund aimed at supporting ailing companies in the industry to the tune of $1 billion.

CrossTower, a crypto and NFT trading platform, was among the parties that initially competed to buy Voyager in the court auction. The company has announced that it plans to make a renewed offer for the company, though details are currently scarce.

CrossTower is "submitting a revised bid, one that it feels will benefit both customers and the wider crypto community," a CrossTower spokesperson told CNBC via email.
CrossTower is also in the process of creating its own industry recovery fund. The company told CNBC that it does not see the fund as "competing" with Binance's.

"We are committed to stabilizing the industry, regaining trust and rebuilding what is arguably the future of finance," the CrossTower spokesman said.

"It will take more than one venture fund to rebuild the technology industry. We need to collaborate with governments and policy makers, and promote transparency. One recovery fund will not be enough. We need to pool our resources and talents to create a bright future for the industry."

Wave Financial is reportedly planning to make a new offer to acquire Voyager, after initially losing out to FTX. According to London's Financial News newspaper, the move could help Wave Financial gain a stronger foothold in the cryptocurrency market.

Matteo Perruccio, president of international for Wave, declined to comment on the report when contacted by CNBC. Last month, Perruccio told CNBC his company “felt that our bid was better for the investors and the debtors.”

Wave's bid to acquire Voyager's exchange token (VGX) has reinvigorated the company, according to an October interview. This move is expected to help Wave gain a stronger foothold in the cryptocurrency market.

Voyager customers are hopeful that any corporate bailout of the firm will include VGX, a token that was created by Voyager as a kind of loyalty rewards program. VGX offers discounts on trading fees, which could be a big help to Voyager customers.

Perruccio told CNBC in October that the team had some clever ideas about how to bring traffic at a lower cost per acquisition while also increasing the per customer balance. This was a big problem at Voyager, and the team was able to find a solution.

In August, Voyager paused trading and transfers of VGX and outlined a plan for customers to swap their tokens for new coins on a separate blockchain. The fate of the token remains unclear, though it has fallen over 85% since the start of the year.

FTX U.S. has offered to buy all of the VGX held by Voyager and its affiliates for $10 million. However, Voyager has stated that it is working to find a solution for the token that is more advantageous, and compatible with FTX U.S.'s offer.

FTX U.S. 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 “low-ball bid dressed up as a white knight rescue.”

Ethos.io, a startup that Voyager acquired in 2019, is also involved in the messy restructuring process. Voyager only acquired Ethos.io's technology, and the firm is planning to revive itself as a separate brand after Voyager's collapse.

Shingo Lavine, co-founder of Ethos.io, says that his firm's technology was key to helping Voyager build out its crypto capabilities. He added that Voyager saw significant growth after offering support for dogecoin, a meme-inspired digital coin.

Adam Lavine, Shingo’s father and fellow co-founder of Ethos.io, said the company has established its own recovery program for VGX holders and Voyager creditors. He added that they have “seen a good response so far across the Voyager community.”

To date, "several thousand users representing 10% of the total VGX market cap" have signed up for the recovery initiative, according to older Lavine. Voyager was not immediately available for comment when contacted by CNBC.

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