FTX sues Voyager Digital to recover $446 million in loan repayments in 2022

By Dietrich Knauth

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

Both FTX and Voyager filed for bankruptcy amid a 2022 cryptocurrency market crash, 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 affiliate hedge fund Alameda Research.

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

Because these loan payments were made so close to FTX’s bankruptcy filing, they can be recovered and potentially used to pay off other FTX creditors, according to FTX’s complaint.

FTX, once among the top crypto exchanges in the world, rocked the industry in November when it filed for bankruptcy, leaving around 9 million customers and other investors facing multi-billion dollar 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 denied any wrongdoing and is due to stand trial in October.

FTX initially appeared to be weathering the storm that brought down Voyager and other crypto companies in the summer of 2022, presenting itself as a “white knight” that could stabilize reeling crypto markets. FTX offered to buy Voyager’s platform in a bankruptcy auction, but the proposed acquisition fell apart when FTX imploded in November.

In its Monday court filing, FTX acknowledged allegations that Alameda raided the assets of FTX clients to cover its subprime borrowing and lending. But he said Voyager and other crypto lenders were complicit in Alameda’s conduct, “knowingly or recklessly” pushing their clients’ assets to Alameda.

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

Three Arrows Capital also went bankrupt in 2022 and its founders have refused to cooperate with court-appointed liquidators trying to recover assets from Three Arrows clients.

(This story has been reclassified to add an abandoned letter in the lede)

(Reporting by Dietrich Knauth. Editing by Gerry Doyle)