28 Sep 2022 Josphat Kariuki
FTX Buys Voyager Digital Assets For $1.4 Billion In A Bidding War
Despite the turbulence, the crypto sector has experienced in the past month, merge and acquisition deals are still happening with the latest being FTX acquiring the infamous Voyager Digital Assets crypto lender.
Indeed, as per an official statement by Voyager Digital, FTX won the auction to acquire the assets of the embattled crypto lender with a bid of $1.4 billion, amid strong competition. However, FTX’s bid is interesting as it consists of two parts – the first one being Voyager’s crypto holdings, which, as of press time, are estimated to be around $1.311 billion. Apart from the crypto holdings, FTX also bought a $111 million incremental part of Voyager’s bankruptcy estate, which would be distributed to creditors upon recovery.
Is the saga over?
Despite FTX outbidding its competitors, the deal won’t turn official until presented to the United States Bankruptcy Court for the Southern District of New York before October 12, 2022. Then, the court has a week to decide whether or not to approve the deal.
The saga began in July when Voyager Digital filed for bankruptcy while coming under intense scrutiny by industry observers due to its business practices. For instance, Voyager Digital stated in its marketing documentation that deposits are covered by the FDIC (Federal Deposit Insurance Corporation) insurance. However, the insurance only covers bank-held cash deposits up to $250,000, while not covering deposits converted into stablecoins. Another red flag was that nearly 60% of the loan book of Voyager Digital was full of loans to Three Arrows Capital, which had also filed for bankruptcy in July.
FTX in an aggressive turf war
Meanwhile, the Sam Bankman-Fried-led FTX is on an expansion frenzy, using the bear market to go on an acquisition spree in the crypto space. FTX’s CEO even stated that the exchange plans to spend billions on the acquisition of companies in the crypto space, to further back up the already completed acquisitions. Furthermore, Bankman-Fried added that FTX would continue to give a helping hand to crypto projects that have large implications in the crypto ecosystem.
The deal, however, is not the first time FTX tried to acquire Voyager Digital. Previously, the exchange tried to place a joint bid, alongside Alameda, but Voyager declined the offer quickly.
A rollercoaster ride for cryptos
FTX’s move comes amid a wide-margined volatility across the crypto sector in the past month. For instance, Bitcoin managed to spread from a low of $18,290.32 (recorded last week) to a high of $22,673.82 (on September 13) in the past 30 days. The year-to-date chart, however, marks a different story – Bitcoin started 2022 close to $48,000 and managed to tumble to a low below $18,000 just six months later.
Ethereum’s price movement is no different from the market leader, but the 30-day price margin is not so shocking, as Ethereum recorded a monthly high of $1,784.50 before plummeting to a low of $1,229.43.
Other crypto projects seem to have followed suit, with several notable exemptions like Ripple (XRP) and Cardano (ADA), with Ripple being on the winning train in the past 30 days, securing its gains.
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