The U.S. arm of Binance, the world’s largest cryptocurrency exchange by trading volume, has agreed to buy the assets of bankrupt crypto lender Voyager Digital.
Voyager resumed its search for a buyer after the collapse of crypto exchange FTX. In September, FTX beat Binance.US to win the auction for Voyager’s customer accounts with a purchase price of around $50 million and in a deal valued at $1.42 billion, The Wall Street Journal reported.
Binance.US will make a $10 million good faith deposit now, in U.S. dollars, and another $10 million deposit once the deal closes, Binance.US Chief Executive Brian Shroder said in an interview. It will also reimburse Voyager for certain expenses up to a maximum of $15 million, according to a release announcing the deal.
Voyager valued the bid by Binance.US at $1.022 billion. That includes Voyager’s cryptocurrency portfolio, worth an estimated $1.002 billion at current market prices.
Palo Alto, Calif.-based Binance.US is looking at a variety of distressed assets as acquisition targets, including already-bankrupt companies and those on the verge of bankruptcy, according to Mr. Shroder. He said the firm has hundreds of millions of dollars to deploy. In April, Binance.US raised $200 million in a seed round that valued the company at $4.5 billion.
The demise of Sam Bankman-Fried‘s crypto exchange FTX has spread contagion across the crypto industry and bred users’ distrust of centralized crypto exchanges, which have rushed to tout reserves. Concerns regarding Binance, the global crypto exchange, have risen recently following its release of a narrow “proof of reserve report” that left investors with questions about the state of its finances.
Mr. Shroder said his firm has a fundamentally different business model from FTX.
“We do not lend out customer assets, we do not offer margin trading, we maintain one-to-one reserves,” he said. “Tomorrow all of our customers can withdraw their assets and we still have hundreds of millions of assets…Sam has destroyed trust, I don’t expect anyone to hear from me and feel comforted.”
Binance.US is serving as a distribution agent for the Voyager assets, Mr. Shroder said. Pending court approvals, Voyager will move customer assets to Binance.US, which will then deliver assets to users who will need to register to use the exchange’s platform.
Mr. Shroder said he is hoping to fast track the process and the firm aims to provide Voyager users access to their assets in March next year.
The company is also giving priority to Voyager employees who are applying for open Binance.US roles, he added.
“The Binance.US bid aims to return crypto to customers in kind, in accordance with court-approved disbursements and platform capabilities,” Voyager said.
Binance.US’s bid was the highest and best bid for its assets, Voyager said. The company will seek bankruptcy-court approval for the deal at a hearing on Jan. 5, 2023.
Voyager, founded in 2019, operated a crypto lending platform that took in customer deposits, paid them interest and lent out the assets to other parties. It went public via a reverse merger in 2019. At the stock’s peak in 2021, the company’s market capitalization was $3.9 billion.
The crypto lender and broker was the first major crypto platform to file for bankruptcy after Three Arrows Capital failed to repay the more than $650 million it lent to the crypto hedge fund.
Voyager’s claims against crypto hedge fund Three Arrows Capital remain with the bankruptcy estate, which will distribute to creditors any available funds recovered.