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Sam Bankman-Fried, Co-Founder and CEO of FTX, Hong Kong, China, Tuesday, May 11, 2021.
Ram Ik | Bloomberg | Bloomberg | Getty Images
Sam Bankman-Fried has become a crypto billionaire and one of the industry’s most recognizable players by building a crypto exchange. FTX To the top sites used by traders and investors.
his company valued at $32 billion Launched in January and now has over 1 million users about $10 billion on average in daily trading volume. But since it is still privately owned, the public does not know how badly it has been damaged. “Crypto Winter” for the past few months.For your referencecoinbasehas gone public and has lost about two-thirds of its value this year, with mining companies marathon digital more than half gone.
Bankman-Fried, who lives in the Bahamas, enjoys the economic benefits of uncertainty, but last week’s five-hour Chapter 11 bankruptcy hearing in the Southern District of New York put him in a wider industry washout. exposed was readily apparent. voyager digital.
Voyager is one of a growing number of crypto firms seeking bankruptcy protection amid a flood of customer withdrawals following a plunge. Bitcoin, ethereum and other digital currencies. Bankman-Fried’s role in the quagmire is more complicated. Because he also manages the quant his trading company Alameda Research. borrowed hundreds of millions of dollars He raised money from Voyager and became a major equity investor, turning the company around and providing a bailout package.
Bankman-Fried, meanwhile, is trying to act as an industry consolidator, buying up distressed assets as a bet on an eventual recovery and to strengthen its foothold in the US. block phiand Bankman-Fried two months earlier 7.6% stake disclosed In a beaten trading app robin hoodBloomberg believes FTX was about to buy Robinhood, Bankman-Fried deny active discussions are ongoing.
Outside the US, FTX Acquires Japanese Crypto Exchange liquid Discussions Are Underway To Buy The Owner Of A South Korean Cryptocurrency Exchange Bithumb.
His activity in Hyperdrive made it very clear that Bankman-Fried was not affected by the epidemic that has infected the cryptocurrency industry.
Last week, with an attorney at Alameda Research, Voyager It was fought in court over what turned out to be a deep and complicated relationship between the two companies. Documents reviewed by CNBC show a relationship dating back to September 2021. Voyager bankruptcy papersThe company said Alameda owes the company more than $370 million, but did not disclose how long Alameda has been a Voyager borrower.
Voyager filed for bankruptcy in early July after suffering huge losses from exposure to crypto hedge funds Three Arrows Capitalalso known as 3AC, went bankrupt after defaulting on loans from many companies in the industry, including more than $650 million from Voyager.
Voyager’s court documents and financial statements show Alameda transitioning from borrower to lender in the space of a few weeks after the 3AC debacle put Voyager in a desperate spot.bankman freed company Offered $500 million bailout to Voyager in late June.
Joshua SussbergKirkland & Ellis partners representing Voyager, in court, Bankman-Fried fast journey From prosperity to bankruptcy. In fact, weeks after Voyager filed for bankruptcy, FTX and Alameda Join Together as Potential Bidders Regarding Voyager’s customer accounts, Bankman-Fried said: Priority It was to provide them with liquidity.
Bankman-Fried is twitter To illustrate his point, he turns the normally boring process into something of a circus. Voyager’s legal team didn’t like this, suggesting that the billionaire was trying to create leverage for himself in potential deals.
People in our process are clearly concerned that FTX is stepping in and making us aware that they are working behind the scenes to force it down its path, he said. “I want to assure all parties, courts and customers that we will not uphold it.”
Alameda attorney and Sullivan & Cromwell partner Andrew Dieterich said of the relief agreement: Offers a faster timeline It was “rejected more violently” than Voyager’s.
Michael Wiles, a U.S. bankruptcy judge for the Southern District of New York, didn’t like where the debate was going.
Wiles told his lawyers he wouldn’t turn the hearing into “a sort of cable news show where people accuse each other and give very characteristic accounts of what their previous proposals and arguments were.” Stated.
Alameda’s attorneys believe that the business relationship between Voyager and its clients runs deeper than a simple lending relationship, and that the company has approximately $377 million from Voyager.
Voyager’s financial documents, which are publicly available because the company’s shares are traded in Canada, appear to show that Alameda initially borrowed significantly more than that.company’s December 2021 book See $1.6 billion in crypto loans at interest rates from 1% to 11% to companies based in the British Virgin Islands.
Alameda is registered in the British Virgin Islands. Headquartered in Tortola, And it’s the only trading partner there.was one of at least 7 entities Borrowed a lot from Voyager. The same Voyager document that disclosed 3AC’s default also stated that “Counterparty A,” registered in the British Virgin Islands, owed Voyager her $376,784,000. increase. In its bankruptcy announcement, the company listed Alameda as owing Voyager $377 million.of another filingwhose loan amounts are associated with companies with borrowing rates between 1% and 11.5%.
Voyager representatives declined to comment. Alameda did not respond to a request for comment.
Outstanding loans to funds based in the British Virgin Islands decreased to $728 million in March 2022. This represents his 36% of the crypto assets Voyager has loaned, which has dwindled to around $377 million after three months. Disclosure data provided by FactSet and provided by Canadian securities administrators.
Voyager’s relationship with Alameda, like 3AC, quickly shifts from lender to borrower. Default Voyager went bankrupt with $654 million in debt.
Alameda took remedial action It’s June 22nd, but there are restrictions. The $500 million bailout $200 million in cash and USDC, and about $300 million in bitcoin, based on prevailing market prices has a capped withdrawal rate, and the 30-day funding amount is capped at $7,500. was limited to $10,000.
An attorney for Alameda said in court Thursday that the loan was given “on an unsecured basis” at the specific request of Voyager management.
By then, Bankman-Fried had already become a major stakeholder in Voyager through two equity investments from Alameda.
In late 2021, Alameda will $75 million stock purchase, acquired 7.72 million shares at $9.71 a share, according to Voyager filings for the period ending December 31.In May of this year, Alameda spent another $35 million With about 15 million shares, the stock plummeted to $2.34.
With this acquisition, Alameda acquired an 11.56% stake in Voyager, making it its largest shareholder. By the month after Alameda completed its bailout, its $110 million equity investment was only worth about $17 million.
Alameda, which owns at least 10% of Voyager’s shares, was required to file disclosures with Canadian securities regulators.But on June 22nd, the day of the rescue, Alameda surrendered In a block of 4.5 million shares, ownership decreased to 9.49%, Overriding Reporting RequirementsCanadian regulations and Voyager’s own filing.that same filing It indicates that the abandoned shares were “subsequently canceled by Voyager.”
Disclosures of the sale indicated that Alameda was giving away a 2.29% stake worth approximately $2.6 million by reducing ownership below the 10% threshold.
Neither Bankman-Fried’s stock injection nor bailout financing could stop the flow as customer redemptions swallowed Voyager’s cash. $500 million package, 9 days after Voyager announcement freeze customer withdrawals trade with. July 6th, Voyager declare chapter 11 bankruptcy.
To reassure the platform’s millions of users, Voyager CEO Stephen Ehrlich said that after the company goes through bankruptcy proceedings, members with cryptocurrencies in their accounts will have a limited mix of holdings. , tweeted that he might be entitled to various things. We will share a portion of the proceeds that can be earned from the reorganized Voyager, the Voyager tokens and the now defunct loan to 3AC.
None of that is guaranteed. Voyager customers scored a small win in bankruptcy court on Thursday. Court granted them access to $270 million in cash Voyager held with Metropolitan Commercial Bank. However, users are still out of luck when it comes to everything else.
Bankman-Fried says he’s here to help customers get back on track and regain what they can. Meanwhile, Voyager’s attorneys describe the FTX-Alameda bid as a bargain.
Whatever happens, this could be Bankman-Fried’s best last shot at extracting some value from his hefty financial commitments. In a press release in July, he sought to spin his offer to benefit Voyager customers who were suddenly caught up in the broken cryptocurrency business.
Bankman-Fried said in a statement that the transaction will allow Voyager’s customers to “earn liquidity and We can get some of our assets back,” he said.
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