© Reuters. FILE PHOTO: Cryptocurrency displays and the Voyager Digital logo are seen in this illustration taken July 7, 2022. REUTERS/Dado Ruvic/Illustrations
Dietrich Knauth
NEW YORK (Reuters) – Bankrupt crypto exchange FTX sued crypto lender Voyager Digital on Monday, seeking the return of $445.8 million in loan repayments that FTX made before it filed for bankruptcy in November 2022.
FTX and Voyager filed for bankruptcy amid the 2022 cryptocurrency market collapse, but Voyager’s bankruptcy preceded FTX’s filing by four months.
After Voyager filed in July, it demanded repayment of all outstanding loans to FTX and its affiliated hedge fund Alameda Research.
FTX said in a court filing that it paid Voyager $248.8 million in September and $193.9 million in October on Alameda’s behalf. FTX also paid $3.2 million in interest in August, according to its court filings.
Because those loan payments were made so close to FTX’s bankruptcy filing, they can be clawed back and potentially used to repay FTX’s other creditors, according to FTX’s complaint.
FTX, once among the world’s top crypto exchanges, rocked the sector in November by filing for bankruptcy, leaving an estimated 9 million customers and other investors facing billions of dollars in losses.
Its founder Sam Bankman-Fried has been charged with fraud, and several top executives, including Alameda Research CEO Caroline Ellison, have pleaded guilty to fraud. Bankman-Fried has pleaded not guilty and is scheduled to stand trial in October.
At first, FTX seemed to have weathered the storm that brought down Voyager and other crypto companies in the summer of 2022, presenting itself as a “white knight” that could stabilize the shaken crypto markets. FTX offered to buy Voyager’s platform at a bankruptcy auction, but the proposed acquisition fell apart when FTX imploded in November.
In its court filing Monday, FTX admitted to allegations that Alameda raided the assets of FTX clients to cover its risky borrowing and lending. But Voyager and other crypto lenders are said to have been complicit in Alameda’s conduct, “knowingly or recklessly” pushing their clients’ funds toward Alameda.
“Voyager’s business model was a feeder fund model,” FTX said. “He was attracting small investors and putting their money with little or no due diligence into crypto investment funds like Alameda and Three Arrows Capital.”
Three Arrows Capital also went bankrupt in 2022, its founders refusing to cooperate with receivers trying to recover assets for Three Arrows’ beneficiaries.
(This story has been rewritten to add the missing letter in the ice)