Last Updated: 29 August 2022
There is nothing as irrational as the crypto market. Who could have predicted, for example, that the cryptocurrency VFX would rise by 125% in one day? Especially if the underlying company is in bankruptcy.
Rise due to takeover rumours
Below is a graph of the price of VGX, the token of the bankrupt crypto company Voyager Digital. The rise coincided with new rumours about a possible takeover.
According to a recent company presentation, numerous companies, including AlamedaFTX, the digital asset hedge fund of crypto billionaire Sam Bankman-Fried, have expressed interest in purchasing Voyager’s assets.
Cryptocurrency up 126.5% in one day
News of a possible buyout caused VGX to skyrocket from a 24-hour low of $0.328 to $0.714, a stunning 126.52% gain in just one day. The token has since returned to earth and is trading at 0.529 at the time of writing.
88 interested companies takeover
The ailing Voyager says in the presentation that of the 88 companies potentially interested in buying its assets, 22 have been active in the marketing process. The company plans to hold a court hearing on the sale on September 7.
Last week, Binance CEO and founder, Changpang Zhao, told The New York Times that both Voyager and the bankrupt Celsius (crypto loans) approached the crypto exchange. The goal of both companies was a financial injection through an acquisition of the companies or assets.
Zhaso said in the interview that his team is one of those involved in the takeover talks.
Better bids than FTX
Last month, crypto-exchange FTX, also a Bankman-Fried-led company, made an offer to buy Voyager’s assets. Voyager did not agree to this. In fact, they were downright insulted. They said the proposal was “very misleading” and a “low-ball offer. ”
In its company presentation, Voyager says it has since received better bids:
“Voyager has already received bids through the marketing process that are higher and better than AlamedaFTX’s proposal; AlamedaFTX’s tweets, interview on Fox, and press releases are inaccurate.”
What does/do Voyager do?
Voyager’s revenue model can be compared to BlockFi. It is a broker, so you can buy and sell crypto and deposit crypto to earn interest on it also. They then lend this crypto out to other parties. In order to lend out crypto, you need to offer collateral to give the company some security.
One of these lending parties is/was Three Arrows Capital (3AC). This company had a loan of 650 million dollars with Voyager but could not repay it. 3AC has now filed for bankruptcy.
According to Frances Coppola, almost half of Voyager’s assets consisted of outstanding loans. About 60% of these loans are (after bankruptcy ‘came’ is perhaps a better word) for the account of 3AC.
Last week, Voyager’s creditors voted that the company may not pay out bonuses to employees; the debt mountain is too large for that.