Binance.US Buys Failing Voyager Crypto Exchange

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Key points to remember

It was a devastating year for Voyager Digital, which filed for bankruptcy in July and had FTX buy assets, only to see FTX file for bankruptcy a few months later. Over 1.7 million users are waiting to see what will happen to their funds. Binance.US announced in a December 19 press release that the company is buying the assets of Voyager Digital for $1.022 billion in a deal that will go through the bankruptcy courts in early January. This has been a disastrous year for crypto that began with the collapse of the Luna Network leading to major bankruptcies that continue to send shockwaves throughout space.

In another twist on the 2022 crypto meltdown, Binance.US has just announced that it will buy bankrupt crypto exchange Voyager Digital after months of confusion. Even though Voyager Digital initially filed for bankruptcy in July, there was a period of stress as FTX bought the assets in a bidding war.

Then, as we all know what happened next, FTX also filed for bankruptcy.

On December 19, Voyager Digital announced that Binance.US would purchase its assets for $1.022 billion, which should help create a clear path for Voyagers customers to access their funds. Well, take a detailed look at Binance.US’ purchase of Voyager Digital and break down the implications it has in the crypto space.

What’s happening in the crypto space?

We recently looked at what led to crypto’s disastrous year and how the crypto landscape is increasingly looking like a house of cards that has begun to fall. The crypto crash continues through the end of this year.

But not too long ago, the cryptocurrency space looked much rosier. Around November 2021, crypto prices peaked when we saw bitcoin hover around $68,000, and Sam Bankman-Fried was named crypto Robin Hood as he touted his plans to share his wealth.

Then, crypto prices began to fall when it became clear that inflation was skyrocketing and central banks would respond by raising rates to cool the economy. Instead of being an inflation hedge, crypto ended up becoming another speculative asset that fluctuated with market conditions. The Russian invasion of Ukraine, along with rising inflation, caused crypto prices to fall even further in the spring of 2022.

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Just when it became clear that things were looking bleak in the crypto industry, May saw the collapse of the Luna crypto network. It was the biggest crypto disaster ever, as around $60 billion was wiped out, sending shockwaves throughout the crypto industry. It was proven that stablecoins were no longer stable and many financial losses ensued.

Before we dig into Binance.US’ purchase of Voyager, we should quickly review some of the other bankruptcies that have impacted the crypto industry this year. The following is a compilation of crypto exchanges and lenders that have filed for bankruptcy or suspended client withdrawals:

Genesis FTX Three Arrows Capital Voyager Digital Alameda Research BlockFi Celsius Network Acquisition of Voyager by Binance.US.

Voyager sent out a tweet along with a press release on the morning of December 19 announcing that Binance.US would buy the bankrupt crypto exchange’s assets. The announcement tweet read: After a review of strategic options focused on maximizing value returned to clients in an accelerated time frame, Binance.US has been selected as the highest and highest bidder for our assets.

According to a Reuters report, Binance.US is an independent legal entity with a license agreement with Binance.com. Binance.US will make a good faith deposit of $10 million and then reimburse Voyager up to $15 million for certain expenses. The majority of Voyager’s $1 billion valuation consists of debt it owes customers.

Voyager has also confirmed that it will seek bankruptcy court approval for the Binance.US deal at a hearing scheduled for January 5, 2023.

Binance.US CEO Brian Shroder issued a statement that included good news for people waiting to access their funds locked by Voyager due to bankruptcy:

Upon completion of the agreement, users will be able to seamlessly access their digital assets on the Binance.US platform where they will continue to receive future disbursements from the Voyager domain.

If the purchase is approved by the bankruptcy court, there could be an end in sight for users who have been unable to access their funds since July. We will continue to follow the story as it unfolds.

So why exactly is Binance buying Voyager? We break this down in the next section.

What happened to Voyager?

Why did Voyager end up filing for bankruptcy in the first place? It all started with the default of Three Arrows Capital this summer, which impacted the entire crypto industry. Voyager discovered that they owed over $660 million to Three Arrows Capital, which left them with no choice but to file for Chapter 11 bankruptcy.

News of the bankruptcy broke on July 6, 2022. In the Chapter 11 bankruptcy filing in the Southern District of New York, the fallen crypto exchange, along with its two affiliates, said they had between 1 and 10 billion dollars in assets. and over 100,000 creditors. Voyager also owed $75 million to Sam Bankman-Fried (commonly known by his initials, SBF), who previously pumped $485 million into the company.

What is FTX’s role here?

It should be noted that Voyager filed for bankruptcy in July, while FTX only did so in November. However, SBF, the founder of FTX and Alameda Research, had strong ties to Voyager. Voyager had originally hoped to be able to return funds to clients by asking FTX to purchase the assets. FTX purchased Voyager’s assets in late September in a bidding war against Wave Financial, a digital asset investment firm. The auction’s winning bid was valued at approximately $1.42 billion.

However, there was another twist in a year filled with problems. When FTX filed for bankruptcy, it was no longer possible for them to buy Voyager’s assets, and the exchange was stuck with no suitor. If the Binance.US acquisition goes through, then at least be able to close a chapter of recent crypto disasters.

How should you invest?

Since crypto lenders and exchanges are not subject to the same regulations as banks, putting your money in these digital assets can be extremely risky, as we have seen around $2 trillion evaporate from the crypto space.

If you are looking to invest in cryptocurrency, you may want to consider our Emerging Technology Kit, which helps spread risk across the industry, rather than investing in a single coin or company. If you’re looking for something more stable, less speculative, and even less affected by current market volatility, check out the Large Cap Kit.

Q.ai eliminates investment assumptions. Our artificial intelligence scours the markets for the best investments for all kinds of risk tolerances and economic situations. You can activate portfolio protection at any time to protect your gains and reduce your losses, regardless of the sector in which you invest.

Conclusion

While this may be a sign of positive news as there is hope for users of the bankrupt exchange to access their funds, there are still many issues in the crypto space as we need to watch FTX’s bankruptcy unfold now. We were unsure if crypto is doomed in the long run or if the industry can eventually bounce back to where it once was one day. We have to recognize that many retail investors have lost significant amounts of their hard-earned money in the crypto space this year.

Download Q.ai today to access AI-powered investment strategies. When you deposit $100, add another $100 to your account.

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