Alameda Research sues Voyager Digital for $446 million for "recklessly" lending to them
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(Kitco News) - Alameda Research, the sister hedge fund to the FTX cryptocurrency exchange, is suing fellow bankrupt crypto firm Voyager Digital to reclaim $445.8 million in loan repayments made by FTX before its own bankruptcy in November.
Lawyers representing FTX and Alameda filed the lawsuit in a Delaware court on Jan. 30. The filing states that after Voyager filed for bankruptcy on July 5, they demanded that all outstanding loans they’d made to FTX and Alameda be repaid to help them make creditors whole.
FTX and Alameda were still riding high in July. Voyager was a firm they had done extensive business with during crypto’s boom years, and they were actually in the process of putting together the winning bid for Voyager’s assets, so making them whole made sense. FTX paid the outstanding loans in full, transferring Voyager $248.8 million in September and $193.9 million in October, along with a $3.2 million interest payment in August.
According to the lawsuit, because these loan repayments were made so close to FTX and Alameda’s own bankruptcies in November, they are eligible to be clawed back and the money used to pay their own creditors instead.
FTX lawyers made a very interesting argument in the filing, acknowledging that Alameda misused the FTX exchange’s customer deposits for its high-risk market plays, but essentially arguing that Voyager was as much Alameda’s accomplice and co-conspirator as its victim. “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,” they wrote.
They described Voyager as a “feeder fund” for bigger and more aggressive hedge funds in the crypto space. “It solicited retail investors and invested their money with little or no due diligence in cryptocurrency investment funds like Alameda and Three Arrows Capital,” the wrote. “To that end, Voyager lent Alameda hundreds of millions of dollars’ worth of cryptocurrency in 2021 and 2022.”
The lawsuit claims that because these loan repayments were made within 90 days of the FTX and Alameda bankruptcies, they are legally allowed to “avoid and recover” the funds on behalf of FTX and Alameda’s creditors and customers, along with any other payments made during the ‘Avoidance Period’ that they might discover later.
When FTX and Alameda collapsed, it also rendered the winning bid for Voyager’s assets null and void, forcing the lender to go looking for a new suitor. On Dec. 19, Voyager announced that Binance.US ultimately offered them “the highest and best bid for its assets” following a review of all their options.
The new Binance bid valued the assets at approximately $1.022 billion, which was lower than the $1.4 billion valuation they received from FTX.US on Sep. 26, but represented the fair market value of Voyager's cryptocurrency portfolio at the time.
The asset sale will be subject to a creditor vote and other customary closing conditions, and if the deal is not closed by April 18, 2023, with the possibility of a one-month extension, “the agreement allows Voyager to immediately move to return value to customers.