Binance.US Is Buying Failing Crypto Exchange Voyager

Key Takeaways

• It has been a devastating year for Voyager Digital as they filed for bankruptcy in July and had assets purchased by FTX, only to watch FTX file for bankruptcy just a few months later. More than 1.7 million users are waiting to see what will happen to their funds.
• Binance.US announced in a Dec. 19 press release that the company was purchasing the assets of Voyager Digital for $1.022 billion in a deal that will go in front of the bankruptcy courts in early January.
• This has been a disastrous year for crypto that started with the collapse of Luna network, leading to major bankruptcies that are still sending shockwaves throughout the space.

In yet another plot twist in the crypto collapse of 2022, Binance.US just announced that they would buy the bankrupt crypto exchange Voyager Digital after months of confusion. Even though Voyager Digital originally filed for bankruptcy in July, there was a stressful period as FTX purchased the assets in a bidding war.

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

On Dec. 19, Voyager Digital announced that Binance.US would be purchasing its assets for $1.022 billion in a move that should help create a clear path for Voyager’s customers to access their funds. We’ll look at Binance.US’s purchase of Voyager Digital in detail 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 the disastrous year for crypto and how the crypto landscape increasingly resembles a house of cards that started falling. The crypto collapse is continuing through the end of this year.

But it wasn’t so long ago that the crypto currency space looked much rosier. Around November of 2021, crypto prices peaked as we saw bitcoin hovering around $68,000, and Sam Bankman-Fried was annointed the “crypto Robin Hood” since he was touting his plans to share his wealth.

Then crypto prices started to plummet as it became evident that inflation was soaring and that the central banks would be responding by raising rates to cool off the economy. Instead of being a hedge against inflation, crypto ended up becoming another speculative asset that fluctuated based on market conditions. The Russian invasion of Ukraine, along with rising inflation, led to crypto prices dropping even further in the spring of 2022.

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Just when it became clear that things were looking bleak in the crypto sector, the month of May saw the Luna crypto network collapse. This was the most enormous crypto disaster ever as an estimated $60 billion was wiped out, sending shockwaves throughout the entire crypto industry. Stable coins were proven to no longer be stable, and many financial casualties ensued.

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

• Genesis
• FTX
• Three Arrows Capital
• Voyager Digital
• Alameda Research
• BlockFi
• Celsius Network

Binance.US’s acquisition of Voyager.

Voyager sent out a tweet along with a press release on the morning of Dec. 19 to announce that Binance.US would be purchasing the assets of the bankrupt crypto exchange. The announcement tweet said, “​​After a review of strategic options focused on maximizing value returned to customers on an expedited time frame, Binance.US has been selected as the highest and best bidder for our assets.”

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

Voyager also confirmed that they’ll seek approval from bankruptcy court on the deal with Binance.US at a hearing scheduled for Jan. 5, 2023.

Binance.US CEO Brian Shroder made a statement that included some good news for folks waiting to access their funds locked up by Voyager due to the bankruptcy:

“Upon close of the deal, 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 estate.”

If the purchase is approved in bankruptcy court, there could be an end in sight for users who haven’t been able to access their funds since July. We will continue to monitor the story as it plays out.

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 began with the default of Three Arrows Capital this summer, which impacted the entire crypto industry. Voyager discovered that they were owed more than $660 million from Three Arrows Capital, which left them with no choice but to file for Chapter 11 bankruptcy.

The news of the bankruptcy came out 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, stated that they had between $1 billion and $10 billion in assets and over 100,000 creditors. Voyager also owed $75 million to Sam Bankman-Fried (commonly known by his initials, SBF), who had given the company a cash injection of $485 million previously.

What’s the role of FTX here?

It’s worth noting that Voyager filed for bankruptcy in July, while FTX didn’t do so until November. However, SBF, the founder of FTX and Alameda Research, was strongly connected to Voyager. Voyager had initially hoped that it could return some funds to customers by having FTX purchase the assets. FTX bought Voyager’s assets at the end of September in a bidding war against Wave Financial, a digital assets investing firm. The winning bid in the auction was valued at roughly $1.42 billion.

However, there was another plot twist in a year filled with issues. When FTX filed for bankruptcy, it was no longer an option for them to purchase the assets of Voyager, and the exchange was stuck without a suitor. If the acquisition by Binance.US goes through, then we’ll at least be able to close one chapter of the recent crypto disasters.

How should you be investing?

Since crypto lenders and exchanges don’t face the same regulations as banks do, it can be extremely risky to put your money into these digital assets, as we’ve seen about $2 trillion evaporate from the crypto space.

If you’re looking to invest in cryptocurrency, you may want to consider our Emerging Tech 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, something less speculative, and even less affected by the current volatility in the market, check out the Large Cap Kit.

Q.ai takes the guesswork out of investing. Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. You can activate Portfolio Protection at any time to protect your gains and reduce your losses, no matter what industry you invest in.

Bottom Line

While this could be a sign of positive news since there’s hope for users of the bankrupt exchange to access their funds, there are still many issues in the crypto space as we have to watch the FTX bankruptcy unfold now. We’re not sure if crypto is doomed for the long term or if the industry can eventually bounce back to where it once was one day. We have to acknowledge that many retail investors have lost significant amounts of their hard earned money in the crypto space this year.

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