FTX is suing Voyager Digital to recover $446 million in 2022 loan payments

By Dietrich Knauth

NEW YORK (Reuters) – Bankrupt crypto exchange FTX on Monday sued crypto lender Voyager Digital, seeking to recover $445.8 million in loan repayments that FTX made before it filed for bankruptcy in November 2022.

FTX and Voyager both filed for bankruptcy when cryptocurrency markets collapsed in 2022, but Voyager’s bankruptcy preceded FTX’s bankruptcy by four months.

After Voyager filed a request in July, it requested repayment of all outstanding loans to FTX and its affiliated hedge fund Alameda Research.

FTX said in a court filing that it paid $248.8 million to Voyager on behalf of Alameda in September and $193.9 million in October. FTX also made a $3.2 million interest payment in August, according to court filings.

Because these loan payments were made so shortly before FTX’s own bankruptcy filing, they can be reclaimed and potentially used to repay other FTX creditors, FTX’s complaint says.

FTX, once one of the world’s top crypto exchanges, shook the sector in November by filing for bankruptcy and facing billions of dollars in losses to an estimated 9 million customers and other investors.

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 denied wrongdoing and is scheduled to appear in court in October.

FTX initially appeared to weather the storm that brought down Voyager and other crypto firms in the summer of 2022, presenting itself as a “white knight” that could stabilize volatile crypto markets. FTX bot announced it would buy Voyager’s platform in a bankruptcy auction, but the proposed acquisition fell through when FTX imploded in November.

In its court filing filed Monday, FTX confirmed allegations that Alameda searched assets of FTX clients to cover its risky borrowing and lending. But it said Voyager and other crypto lenders were complicit in Alameda’s behavior by “knowingly or recklessly” pushing their clients’ fortunes towards Alameda.

“Voyager’s business model was that of a feeder fund,” FTX said. “It has attracted retail investors and invested their money in cryptocurrency mutual funds like Alameda and Three Arrows Capital with little to no diligence.”

Three Arrows Capital also filed for bankruptcy in 2022, and its founders have refused to cooperate with court-appointed liquidators trying to recover assets for Three Arrows clients.

(Reporting by Dietrich Knauth. Editing by Gerry Doyle)