Voyager Digital Ltd. is trying to sign a deal to sell itself to one of the bidders that lost the auction for the bankrupt crypto lender, after the winner of that auction, FTX, was itself forced into insolvency proceedings.  

One of the losing bidders included crypto exchange CrossTower. CrossTower did not immediately respond to a request for comment.

FTX violated its contract to buy Voyager out of bankruptcy, according to Voyager’s main bankruptcy attorney Joshua Sussberg. FTX has agreed that Voyager can pursue other bids, but has not yet confirmed that the company is pulling out of the contract to buy the smaller crypto company, Sussberg said in court on Tuesday.

“We were shocked, disgruntled, dismayed,” Sussberg said during a Voyager bankruptcy hearing. “There will be no transaction with FTX, I think that is quite obvious.”

The events underscore how the sudden implosion of FTX, the second-biggest cryptocurrency exchange in the world, is rippling through the industry, hurting smaller, troubled crypto companies like Voyager. The Voyager deal unraveled after FTX founder Sam Bankman-Fried resigned as chief executive and the company filed its own Chapter 11 bankruptcy.

“I don’t think we’ve seen the end of the contagion factor or the fear that is running through the market,” Sussberg said in court.

FTX won a weeks long auction for Voyager under a deal tied to court approval of the creditor payment plan, lawyers said during a court hearing held by telephone.

Bankman-Fried’s empire is being run by restructuring experts brought in when the company filed for bankruptcy and regulators in the Bahamas started their own proceedings against FTX. Voyager filed bankruptcy earlier this year after a steep decline in cryptocurrency values. 

The sale to FTX was valued at about $1.4 billion, of which $51 million is in cash. As part of the sale, FTX would have moved customers on to its platform.

The bankruptcy is Voyager Digital Holdings Inc., 22-10943, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).

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