FTX.US loses president, wins auction for Voyager’s digital assets

Getting your Trinity Audio player ready...

FTX has won the auction for Voyager Digital’s digital assets, while the president of the cryptocurrency exchange’s United States-facing operation is the latest to trigger his ejection seat.

Late Monday, Voyager announced that West Realm Shires Inc, aka the Bahamas-based FTX’s U.S.-facing offshoot FTX.US, had submitted “the highest and best bid” for the bankrupt Voyager’s assets. Voyager filed for Chapter 11 protection in July, one of the many casualties from the contagious collapse of Terraform Labs’ algorithmic stablecoin and the Three Arrows Capital (3AC) “crypto” hedge fund.

Voyager said FTX.US’ offer is valued at “approximately $1.422 billion,” the bulk of which ($1.311 billion) represents “the fair market value of all Voyager cryptocurrency.” The actual value of these tokens will be calculated at “a to-be-determined date in the future.” The bid also includes approximately $111 million of “incremental value,” aka the only new money that FTX is putting up.

3AC was said to have owed Voyager over $650 million when it collapsed, and Voyager said on Monday that its claims against 3AC “remain with the bankruptcy estate, which will distribute any available recovery against such claims to the estate’s creditors.”

Voyager claimed that the FTX.US bid “maximizes value and minimizes the remaining duration of the company’s restructuring by providing a clear path forward for the Debtors to consummate a chapter 11 plan and return value to their customers and other creditors.” Voyager appeared to confirm that its former customers would find their assets transferred to FTX accounts once Voyager’s Chapter 11 saga is concluded.

Voyager further claimed that FTX.US had prevailed following “multiple rounds of bidding in a highly competitive auction process that lasted two weeks.” The Wall Street Journal previously reported that FTX and rival exchange Binance were the leading contenders to acquire Voyager’s assets, although the report claimed at the time that these bids were in the $50-million range.

Voyager previously rejected what it described as FTX boss Sam Bankman-Fried’s “lowball bid dressed up as a white knight rescue,” but apparently desperate times call for desperate measures.

The FTX.US deal still requires the approval of New York bankruptcy courts, as well as a creditor vote. The plan will be presented to the court on October 19, while the creditor vote will follow at an unspecified later date. There’s no guarantee that creditors will be as enthusiastic as Voyager appears to be in handing SBF the keys to its kingdom.

Buh-bye Chicago, Brett Harrison

In other FTX news, SBF announced Tuesday that FTX.US was moving its corporate headquarters from Chicago to Miami. FTX first put down Windy City roots in June 2021, and it was a mere four months ago that the 9,000-square-foot downtown Chicago office was officially christened with great fanfare and the presence of Mayor Lori Lightfoot.

No doubt many of FTX.US’s Chicago-based staff are still digesting the surprise announcement, which SBF attempted to justify by saying that remaining “agile and coordinated is a core value.” Agile, perhaps. Coordinated? Tell that to the staffers being suddenly asked to move to an active hurricane zone.

In a seemingly related move, Brett Harrison, president of FTX.US, announced Tuesday that he’ll be stepping down in the coming months but would remain with the company in “an advisory role.” Harrison, who’d only been president since May 2021 and who previously described his gig as the “opportunity of a lifetime,” acknowledged Tuesday that “this industry is at a number of crossroads” due to the “increasing fragmentation and technological complexity of the market’s landscape.”

In August, FTX.US was one of the entities that were publicly rebuked by the Federal Deposit Insurance Corporation (FDIC) for falsely informing customers that their crypto deposits were FDIC-insured in case of calamity. The FDIC warned the public that it doesn’t insure “crypto-related products,” and anyone telling them otherwise—including Voyager Digital—was lying through their teeth.

Harrison himself had tweeted that direct deposits from customers’ employers were stored in FDIC-insured accounts under the customers’ names. Harrison later deleted the tweet and claimed that FTX “really didn’t mean to mislead anyone,” although intentions matter less than the perception FTX left with its customers.

SBF appeared unmoved by Harrison’s exit in a video interview with Bloomberg on Tuesday, saying only that a change “had been in the works for a while” and that it’s “important that we go in directions that we feel best in.” Given that Harrison had only been on the job for 17 months and yet his exit had been planned “for a while,” it’s worth wondering exactly what he discovered when he peeked behind the FTX curtain that might have spooked him so bad.

For instance, the United Kingdom’s Financial Conduct Authority (FCA) issued a warning last week that FTX was “targeting” U.K. customers without authorization and urged customers to steer clear. Initially, SBF tried to blame it on “scammers” posing as FTX but the Financial Times subsequently reported that the warning was indeed aimed squarely at FTX. More ominously, the warning was issued despite SBF’s insistence that his company had been “in discussion with the FCA about licensing for a while.”

Crypto corner suites turn into dead ends

With few exceptions, the leaders of U.S.-licensed exchanges haven’t lasted very long in those roles. Last year, Brian Brooks stepped down as chief executive officer of Binance’s U.S. offshoot after only three months on the job, sparking rumors that he’d been led down the garden path as to Binance.US’s independence from the controversial mothership. (Brooks’ predecessor lasted two years, then literally disappeared, almost as if she expected major blowback for leading the compliance-challenged operation.)

Harrison joins the steady stream of departing crypto bosses who’ve apparently decided that the current crypto winter isn’t going to warm anytime soon, and it’s no fun being the guy who goes down with the ship after striking an iceberg.

The crypto corner suite exit parade grew by one on Tuesday as word broke that Alex Mashinsky, CEO of bankrupt crypto lender/Ponzi scheme Celsius, had resigned his post. Mashinsky issued a statement expressing “regret that my continued role as CEO has become an increasing distraction” while apologizing for the “difficult financial circumstances members of our community are facing.” Sentiments that absolutely no one took as sincere.

Honestly, it’s as if all the grifters collectively decided that the jig is up and best to leave now before the road out of Dodge starts to resemble a Russian border crossing. With any luck, criminal charges will come for Mashinsky before he flees the country and gets his own Interpol Red Notice.

And then, we learn that SBF is looking to raise another $1 billion for the purpose of buying Celsius. Seriously, at this point, just let SBF assume control over all of “crypto” so he can start negotiating with Walmart for the rights to the “Sam’s Club” trademark. And then push the whole crooked enterprise down a deep, deep hole.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.