Binance US announced yesterday that it has acquired the failing crypto company Voyager Digital LLT for the sum of about $1 billion: BNB continues to go down.
After trying every possible option, crypto lender Voyager considered Binance.US’s offer to be the highest and best for its assets.
According to the deal statement, the correct figure would be $1.022 billion, the equivalent of the fair market value of Voyager’s assets at current prices, plus $20 million in incremental value.
The paradox of the affair is the fact that Voyager was to be acquired initially by FTX.US, the US affiliate of the bankrupt FTX exchange. FTX.US’s offer was for $1.2 billion, but after FTX went bankrupt, the offer was obviously canceled. At this point, Bilance.US stepped in with its offer.
Next moves by crypto exchange Binance after its purchase of Voyager. How will BNB respond?
Despite nominal independence, Binance.US operates as a “de facto subsidiary” of Binance’s international business. As it happens, Voyager filed for bankruptcy protection in July 2022 after crypto hedge fund Three Arrows Capital (3AC) defaulted on a significant loan position extended by Voyager.
The purchase has not been fully formalized, but Voyager said Monday it will seek bankruptcy court approval for the deal with Binance.US at a hearing on 5 January 2023.
Binance.US’s next move will be a good faith deposit of $10 million, reimbursing Voyager for some expenses, capped at $15 million.
If the deal with Binance.US does not materialize by 18 April 2023, Voyager has the option to move to return money to customers.
Voyager Digital LLC will seek bankruptcy court approval to enter into the purchase agreement between the two companies. The sale is made possible through a Chapter 11 bankruptcy plan.
The CEO of Binance.US posted several statements about the upcoming acquisition and the plan to compensate customers for blocked funds:
“We will do everything in our power to expedite the legal and judicial approval process. The current goal, pending court approvals, is to provide users with access to their assets in March 2023.”
Among the central points is to maintain transparency and security for customers, Binance’s fundamental foundations. Most importantly, capitalization as a source of peace of mind for customers:
“In addition, we maintain an industry-leading security program to protect customer funds. Binance.US is well capitalized: our assets exceed our liabilities. All of our customers could withdraw their assets tomorrow, which is their right, and we would still have hundreds of millions of current assets.”
The case of Voyager
On 5 July 2022, Voyager Digital Holdings, Inc. and two affiliated debtors filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code.
The week before, Voyager Digital issued a default notice to Three Arrows Capital for its inability to make payment on a cryptocurrency loan worth more than $650 million.
This, combined with a drastic drop in the value of more or less all crypto meant that the platform was no longer able to meet its users’ withdrawal requests.
Voyager CEO Stephen Ehrlich said at the time of the failure:
“Although I firmly believe in this future, prolonged volatility, contagion in the crypto market in recent months and the default of Three Arrows Capital now require us to take deliberate and decisive action. The Chapter 11 process provides an efficient and equitable mechanism to maximize recovery.”
In addition to FTX’s subsequent interest, namely its attempt to acquire Voyager, it appears that Alameda Research (both of Sam Bankman Fried at the time), was one of Voyager’s largest creditors. The estimated claim appears to have been around $75 million.
Binance Coin (BNB) in distress in recent days
Despite the recent news, the Binance Coin token has lost over 13% in recent days. In fact BNB has a close connection with Binance, so everything about the huge exchange platform, reflects on the token.
Much is related to investors’ fear that Binance may prove to be insolvent just like FTX.
After Binance’s Proof of Reserve was removed from the site, the news created a panic among investors on the large exchange platform. As of now, there has been no statement on the matter, Changpeng Zhao, the CEO of Binance has not yet spoken on the cancellation of its Proof of Reserve.
However, the CEO of Binance has been clear in explaining that all investors should trust blockchains because they are large collectors of secure and reliable information.
Rumors even confirm an ongoing investigation at Binance.
According to a Reuters report, there is a split between prosecutors at the US Department of Justice over a long-standing criminal investigation into Binance. This division has caused a delay in authorities reaching a decision, according to four people familiar with the matter. Interestingly, this case began in 2018 when the Changpeng Zhao-led cryptocurrency exchange was in its early days.
The large outflow of funds from Binance, dictated by the general panic, does not seem to have put the large exchange platform in trouble. Which is showing itself to be available to every customer request, proving its solvency ratio.
Several analysts have speculated a downward trend as far as BNB is concerned, with likely losses for native token holders.