Battle of the Bankrupts as FTX Demands $446M From Voyager Digital
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Battle of the Bankrupts as FTX Demands $446M From Voyager Digital

Created 1yr ago, last updated 11mo ago

FTX filing blames crypto lenders like Voyager for "recklessly" feeding Sam Bankman-Fried's Alameda Research hundreds of millions, which "played a role" in FTX's bankruptcy.

Battle of the Bankrupts as FTX Demands $446M From Voyager Digital

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Before Sam Bankman-Fried's crypto empire collapsed, his trading firm, Alameda Research,  repaid almost a half billion dollars in outstanding loans to already-bankrupt crypto lender Voyager Digital.

Now, the management team overseeing the FTX Group's bankruptcy wants it back.

Besides arguing that because the payment was within the 90-day "Avoidance Period" in which a bankrupt company can claw back money it paid, the FTX restructuring team said Voyager and other crypto lenders share some of the blame for the exchange's collapse.

FTX collapsed after it was revealed that the exchange had allegedly sent some $10 billion of customers' funds to sister company Alameda after it suffered heavy losses in the crypto winter. Voyager rejected a rescue loan from FTX that it called a "low ball" acquisition bid. which Bankman-Fried won in a bankruptcy auction. That was not collected due to FTX's bankruptcy.

That is well known, FTX Group's restructuring management told the Federal Bankruptcy Court in Delaware on Jan. 30. But it added:

"Largely lost in the (justified) attention paid to the alleged misconduct of Alameda and its now-indicted former leadership has been the role played by Voyager and other cryptocurrency 'lenders' who funded Alameda and fueled that alleged misconduct, either knowingly or recklessly."

Calling Voyager a "feeder fund," the FTX Group's filing said the lender "solicited retail investors and invested their money with little or no due diligence in cryptocurrency investment funds like Alameda and [bankrupt hedge fund] Three Arrows Capital."

90 Days

For all of the blame casting, the meat of FTX Group's argument comes down to that avoidance period.

Specifically, they are arguing that Voyager was paid "preferentially" — noting among other things that some of the 10 loans Voyager made to Alameda were paid before they came due.

The vast majority of those payments came in two parts. First, there were the funds loaned to Alameda by Voyager. That was covered in the Sept. 19 payment of $248.8 million in various cryptocurrencies, as well as various fees.

Second, on October 17, FTX repaid loans worth another $190.6 million in loans.

FTX's management wants that back, too.

And, it is not asking for cryptocurrency in which the loans were both made and repaid, but the award "of no less than $445.8 million" from Voyager.

The rest of the document is an argument over whether the Delaware Bankruptcy Court overseeing FTX's case is the proper venue, as opposed to the Southern District of New York's Bankruptcy Court, which is overseeing Voyager's case.

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