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FTX wins Voyager Digital auction bid for $1.4 billion

Bankrupt crypto lender Voyager announced that crypto exchange FTX through its U.S. subsidiary (FTX US) has made the winning bid for its assets.

The bid in the two-week auction process came in at $1.422 billion, which consists of all Voyager cryptocurrency valued at $1.311 billion at current market price and an additional consideration worth about $111 million in incremental value, according to a Voyager press release.

The winning bid was first reported over Twitter by Liz Hoffman, a former Wall Street Journal reporter whose yet-to-be launched media publication has backing from FTX Founder and CEO Sam Bankman-Fried. Hoffman said the bid is ultimately worth $50 million after stripping away the crypto assets, the bulk of which will be returned to creditors.

“FTX US's bid maximizes value and minimizes the remaining duration of the Company's restructuring by providing a clear path forward for the Debtors to consummate a chapter 11 plan and return value to their customers and other creditors,” the press release stated.

Voyager also said FTX US will allow customers to trade and store their crypto assets after chapter 11 case closes through the FTX US platform.

UNITED STATES - DECEMBER 8: Sam Bankman-Fried, founder and CEO of FTX, testifies during the House Financial Services Committee hearing titled 
Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States, in Rayburn Building on Wednesday, December 8, 2021. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)
Sam Bankman-Fried, founder and CEO of FTX, testifies during the House Financial Services Committee hearing titled Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States, in Rayburn Building on Wednesday, December 8, 2021. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)

Voyager’s own claims on unpaid loans it lent to bankrupt hedge fund Three Arrows Capital will remain as part of the bankruptcy estate, which will distribute any available recovery. Voyager lent at least $650 million to Three Arrows.

The debtor firm said after considering both potential sales and standalone reorganization, the company determined FTX’s offer presented the best alternative for Voyager stakeholders.

The auction follows three months of bankruptcy proceedings since the crypto lender filed for Chapter 11 on July 5. At its bankruptcy filing, the company held $1.3 billion in customer assets on its platform spread across 3.5 million users.

During this time, Bankman-Fried has worked to bail out distressed crypto businesses facing liquidity problems as the value of cryptocurrencies plummeted in May and June.

At the beginning of July, FTX closed a deal with BlockFi, another financially hurt crypto lender, for up to $680 million after the firm's series D funding round valuation stood at $3 billion in March 2021. The deal followed FTX acquisitions of clearing firm Embed and Canada-based trading platform Bitvo

BRAZIL - 2022/07/19: In this photo illustration, the FTX Crypto Derivatives Exchange logo is displayed on a smartphone screen, on the side of Bitcoin cryptocurrencies. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
In this photo illustration, the FTX Crypto Derivatives Exchange logo is displayed on a smartphone screen, on the side of Bitcoin cryptocurrencies. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

In late July, FTX and its sister company Alameda Research, which is also majority owned by Bankman-Fried, offered a joint proposal to Voyager Digital to buy its customer assets. But Voyager turned down the offer, calling it a “low-ball bid” that made “several false and misleading assertions.”

At the beginning of August, Voyager paid out $270 million from cash accounts the court deemed not part of the bankruptcy estate. Earlier this month, Alameda also agreed to return a $200 million loan borrowed from Voyager before the end of September.

Outside of the press release, neither FTX nor Voyager would offer further comment by press time.

The transaction agreement for FTX’s bid, which will be subject to a creditor vote, will be presented for approval to the United States Bankruptcy Court for the Southern District of New York on Wednesday, October 19, 2022.

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David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers

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