Knight in shining armor

Happy Friday, folks. It’s the last day of SeptemBear and what a month it was. Ethereum merged, markets plummeted, and—most importantly—this newsletter launched. Here’s to an UPtober (hopefully).

Today: A happy ending for Voyager, a billionaire’s excursion into mining, and the demise of crypto CEOs. Let’s go.

—Vincent & Angelina

FTX to the Rescue

We know FTX CEO Sam Bankman-Fried in chain mail is probably not the first image that comes to mind when you think knight in shining armor. But amid bear market mayhem, Bankman-Fried has been coming to the rescue of struggling crypto businesses left and right. The latest? Voyager.

The beleaguered crypto lender, which froze customer withdrawals and filed for bankruptcy in July, announced on Monday that FTX US officially won the bidding war for Voyager’s crypto assets.

• FTX’s bid is valued at $1.42 billion: $1.3 billion for the fair market value of Voyager’s crypto assets plus an additional $111 million in “incremental value.”

FTX’s acquisition of Voyager’s crypto brings a relatively tidy end to one of the messiest crypto bankruptcies this year. The cherry on top: Creditors might actually get their money back.

Here’s how: In bankruptcy proceedings, crypto platform customers are considered “unsecured creditors” with few legal options. They’re typically not entitled to the digital assets they purchased if the platform goes under. FTX’s asset purchase gives creditors a better chance at redemption.

Next steps: Voyager hinted in a press release that its creditors will be able to transfer their crypto to FTX US and claimed that FTX’s bid will “maximize the value returned to [investors] in the shortest time.” Still, nothing’s set in stone.

The asset purchase deal still requires two approvals from 1) a bankruptcy court and 2) Voyager’s customers via a vote (the date for which is TBA).

Bottom line: There’s light at the end of the tunnel for Voyager’s customers—Sam Bankman-Fried being the gallant knight saving creditors from a potential Mt. Gox.

–Angelina

Crypto Vultures are Circling

You say bear market…Jihan Wu says build market. This week the crypto billionaire announced plans to set up a $250 million fund to buy the distressed assets of struggling bitcoin miners. These types of “vulture funds” are common in the traditional finance space, but this may be the first of its kind in crypto.

Crypto mining company Bitdeer Technologies (where Wu is chairman) will invest $50 million in the fund and scoop up cheap mining machines for its own use.

• “We can buy the cheaper machines and run them in our existing facilities with stable and cost-effective power purchase agreements,” Bitdeer CEO Matt Kong told Bloomberg.

The background: Miners’ margins have been squeezed in this latest bear cycle as energy costs increase and mining rewards decrease. At the end of June, miners held $4 billion in loans under stress. Last week, Compute North became the first crypto miner to file for bankruptcy.

Will it work for Wu? His chances look good. Over the summer, bitcoin miner Cleanspark acquired more 2,800 discounted bitcoin mining rigs and grew its bitcoin production by 50%. There are “unprecedented opportunities in this market,” the firm’s CEO Zach Bradford said.

–Vincent

Exit stage left

Several crypto executives have recently left their firms in the wake of plunging crypto prices. The list so far:

• Kraken CEO Jesse Powell: Powell founded Kraken 11 years ago, and new CEO David Ripley said Powell wants to focus on advocacy.

• President of FTX.US Brett Harrison: Harrison will stay in the industry but didn't say what's next.

• Co-CEO of Alameda Research Sam Trabucco: Trabucco wanted to “relax” but wouldn’t rule out another crypto project in the future.

• Celsius CEO Alex Mashinsky: Celsius went bankrupt earlier this year, and it’s possible that Mashinsky will be sued.

• Genesis CEO Michael Moro: Genesis slashed 20% of its workforce earlier this year after it suffered losses from the collapse of Three Arrows Capital.

In sum: Bear markets are even more exhausting for crypto execs than they are for traders. Look out for more departures and new directions to come.

–Vincent

In other news:

• Walmart goes metaverse with the launch of Walmart Land and Walmart’s Universe of Play on Roblox.

• Latin Americans have turned towards crypto lenders in the face of inflation and higher interest rates for loans at rates that are 50% cheaper

• Christie’s launched a NFT marketplace on Ethereum, stepping up its high-profile NFT auction game.

• Crypto is quietly thriving in Sub-Saharan Africa.

• The CFTC served a lawsuit against Ookie DAO members.

And that’s what you need on your radar this week in crypto. Let us know whether you think we’re in for UPtober or OctoBear. See you back here on Sunday!