Crypto Three Things (7/25)

Monday, Jul 25th 2022

Commentary

Low-ball bid, Three Arrows founders emerge, Zipmex in search of a lifeline

 "Life isn’t a matter of milestones, but of moments." —Rose Kennedy


1) FTX offer rejected by Voyager: Sam Bankman-Fried's crypto exchange FTX and his trading firm Alameda offered to provide liquidity to Voyager customers by buying out digital assets of the bankrupt crypto lender. In response, Voyager said the offer is a "low-ball bid" that "advantages AlamedaFTX." Voyager filed for Chapter 11 and reported $1.1B in total loan obligations, including $645M from insolvent crypto hedge fund Three Arrows Capital. 

Titan's Takeaway: The offer came as a surprise shortly after FTX set out to seek fresh funding. Still, the rejected proposal could have helped the crypto exchange bring in new clients and expand its brand, essentially rolling Voyager clients into FTX.

2) Three Arrows founders discuss their fund's demise: Su Zhu and Kyle Davies broke their silence five weeks after the implosion of their crypto hedge fund Three Arrows Capital. While still in hiding, they spoke to Bloomberg and acknowledged how excessive crypto speculation led them to make high-risk loans that threatened the firm. "We positioned ourselves for a kind of market that didn't end up happening," Zhu said, adding it was "not a surprise" that the fund collapsed.

Titan's Takeaway: The founders can deflect blame all they want, but it will not change the course of the investigation. The troubled crypto fund has outstanding obligations totaling $2.8B, and liquidators have recovered only $40M.

3) Zipmex in search of buyout proposal: The crypto exchange that operates mainly in Asia is in talks with several interested parties over a potential acquisition. Zipmex halted customer withdrawals a few days ago as a series of defaults sent shockwaves across the industry before restarting the platform's Trade Wallet Friday. Zipmex said it had $48M of exposure to troubled crypto lender Babel Finance and $5M with Celsius, a heavyweight lender that filed for Chapter 11 bankruptcy protection earlier this month. 

Titan's Takeaway: Zipmex is the latest crypto firm to freeze withdrawals amid a relentless market pullback that wiped out $2T in market value. With fundraising, legal action, or restructuring on the table, the platform is looking into a few tough months ahead. 


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