A Voyager investor says the FTX meltdown puts the bankrupt crypto lender's bailout in jeopardy, with $1.3 billion of customer assets on the line
- FTX US was set to buy the assets of the bankrupt crypto-lender Voyager.
- But FTX's turmoil casts doubt upon that deal, Ullas Naik, an investor in Voyager, told Insider.
Sam Bankman-Fried, the founder and CEO of FTX, was once hailed as a savior of the crypto industry by analysts and investors after market turmoil brought down several companies in the space. But now, as the crypto exchange faces its own bankruptcy, some investors who were poised to receive bailouts may once again be out of luck.
In September, FTX's US counterpart won an auction to buy the assets of the crypto lender Voyager Digital for $1.4 billion, which went bankrupt in July following the implosion of the cryptocurrencies Terra and Luna. FTX US' bailout was set to offer some relief to Voyager's customers, who faced the complete loss of their crypto assets, with claims of about $1.8 billion in total.
Through the sale, customers would be able to recover 72% of their assets, or about $1.3 billion, through a mix of cryptocurrencies and cash, Voyager estimated in October. But on Friday, FTX announced that it and FTX US had filed for bankruptcy and that Bankman-Fried had resigned as CEO of both companies.
Doubts about the deal had already begun to emerge earlier in the week. Ullas Naik, an early investor in Voyager, told Insider on Thursday that he was unsure whether that deal will go through. Naik, the founder and general partner of Streamlined Ventures, said he had not gotten any updates on the status of the deal.
"We don't know what's going to happen there," Naik told Insider. "Sam Bankman-Fried overplayed his hand. That's becoming clear."
FTX US is a separate entity from FTX, which is based in the Bahamas. The two companies have several investors in common, including Sequoia Capital, Lightspeed Venture Partners, IVP, and SoftBank.
In addition to FTX and FTX US, Bankman-Fried owns the crypto trading firm Alameda Research, which was revealed in a November report by CoinDesk to have much of its assets tied up in FTX's own cryptocurrency, FTT. The report fueled concerns about the financial interdependency between FTX and Alameda. Furthermore, some FTX customers had reported issues making withdrawals from their accounts, raising concerns about FTX's liquidity.
In response, Changpeng Zhao, the CEO of Binance, a rival exchange and early investor in FTX, announced on Sunday that his company planned to sell off its holdings of FTT for about $530 million. The announcement further fueled concerns about FTX's financial position, and many of the exchange's customers moved to withdraw assets from their accounts.
The rush of withdrawal requests meant that FTX faced not having enough liquid assets on hand to return cash and tokens to customers. A similar phenomenon led to the demise of Voyager as well as another crypto lender, Celsius, which also filed for bankruptcy in July.
The panic among customers and investors also led to a massive sell-off of FTX's token, which plummeted 75% between Sunday and Tuesday. As FTX faced a full-blown crisis, on Tuesday, Binance announced that it would acquire the beleaguered exchange. But Binance walked away from the deal the next day.
On Thursday, Bankman-Fried estimated that FTX only had 80% available in liquid assets of the roughly $5 billion in assets customers withdrew on Sunday. He also tweeted that FTX US, Voyager's prospective acquirer, was "100% liquid." Now, however, both companies are set to enter bankruptcy proceedings.
Both FTX and Voyager Digital declined a request for comment.
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