Bankrupt crypto lender Voyager Digital has defended its plan to sell assets to Binance.US and responded to objections raised by US state and federal regulator against the $1 billion proposal.
In a separate filing, Voyager described claims of Alameda Research, the trading arm of bankrupt crypto exchange FTX, as “hypocrisy and chutzpah based on unverified speculation.”
“Raising Disclosure Statement objections based on unsubstantiated and unverified media reports while ignoring the substantial information already made available to the Objectors is a naked attempt to undermine the Binance.US Transaction and attack Binance.US,” the filing added.
Voyager explains that Binance.US’ bid is structurally similar to the FTX US’ proposal. Binance had emerged before as one of the highest bidders for Voyager Digital’s assets. Following FTX’s collapse, Voyager reopened the bidding process and its board was reportedly in active discussions with alternative bidders.
The legal document further states:
“No other transaction proposed to the Debtors as of the date hereof provides better recoveries to creditors on a risk adjusted basis. In addition, the Binance.US Transaction provides (a) the most value currently available for the Debtors’ assets and ultimately to their stakeholders— (b) the fastest route to distributing such value to customers, and (c) the least degree of risk to the Debtors’ stakeholders (and particularly customers) compared to other available alternatives.”
Furthermore, the liquidators explain that Binance.US offer contains a broad “fiduciary out” provision, which allows them to terminate the transaction if a better deal emerges in the future. Additionally, the agreement permits Voyager creditors to “pivot to a toggle transaction” that enables them to return assets to stakeholders if they exercise their fiduciary out.
“If the Debtors pivot to the Toggle Transaction, the Debtors may elect to use Binance.US to provide services to facilitate the Debtors’ self-liquidation, allowing the Debtors to “self-liquidate” without expending additional time, resources, and cash negotiating terms with a new third-party,” they added.
Voyager’s response alleges that doubts expressed by the SEC, alongside financial regulators from New York, Texas and Vermont, regarding Binance’s financial stability are unwarranted. The filing also hit out at Alameda, which had previously attempted to rescue Voyager before going bankrupt itself, saying its attempt to oppose the deal raises “frivolous arguments that exhibit hypocrisy and chutzpah at its finest.”
The statement added that these objections ignore the practical realities and fail to identify any transaction that provides a better outcome for the creditors. Voyager – supported by a committee representing its victims – said FTX US’s cataclysmic collapse not only derailed the chapter 11 cases but sent shockwaves through the cryptocurrency industry.
“The resulting contagion in the market contributed to other key exchanges filing for chapter 11 protection or halting trading and withdrawals on their platforms. Given this, and the resulting prolonged timeline and increased administrative costs of these chapter 11 cases, the Debtors must move quickly to preserve the value of the Debtors’ estates and maximize returns to creditors,” the filing said.
The US top regulator has filed a so-called “limited objection” to the proposed $1.02 billion acquisition, citing the lack of clarity on Binance.US’s ability to close the deal. As such, the SEC wants to get more information on the exchange’s source of funding and the nature of business operations following closure of the deal.
The SEC also wants to know how Binance.US intends to secure customer assets during and after the transaction and how it would rebalance its cryptocurrency portfolio.
In its filing, the SEC said it has already sent its inquiries to Binance.US’s counsel and expects to receive a revised disclosure statement prior to a hearing on the matter.