FTX proposes joint proposals to save Voyager’s bankrupt customers
The FTX crypto exchange announced on Friday that it plans to give Voyager Digital’s clients access to some of their funds.
According to a joint proposal between FTX and Alameda Ventures, a trading firm founded by Bankman-Fried, Voyager customers will be able to claim a portion of their funds that were frozen more than three weeks ago. However, it is unclear how much each customer will be able to receive.
Under the joint plan, Alameda Ventures will acquire all of Voyager’s digital assets and digital asset loans, except for Voyager’s loan to bankrupt crypto hedge fund Three Arrows Capital.
Voyager’s customers can then get some of their money if they open an account with FTX. Such customers can either withdraw their cash balance immediately or use the funds to purchase digital assets on FTX’s platform, FTX said.
Customers are expected to participate voluntarily, the company added.
FTX expects to close the deal in early August, subject to the requirements of the Chapter 11 process and the need for court approval.
In a statement on Friday, Sam Bankman-Fried said: “Voyager’s clients did not choose to be bankruptcy investors with unsecured claims. The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business – a way that allows clients get early liquidity and reclaim part of their assets without forcing them to speculate on bankruptcy outcomes and take unilateral risks.”
Under the joint proposal, FTX would not purchase Voyager’s loans to Three Arrows Capital or others during litigation. The joint proposal expects Voyager to pursue its rights with respect to Three Arrows Capital matters and use any recoveries to supplement fund distributions to clients, whether or not such clients open accounts with FTX.
Helping failing crypto firms
The joint proposal comes two weeks after Voyager filed for Chapter 11 bankruptcy less than a week after suspending trading and withdrawals due to the current crypto market crash.
The move comes days after the company issued a default notice to bankrupt hedge fund firm Three Arrows Capital (3AC) for non-payment of a loan.
Many recent problems within the crypto industry can be traced back to the spectacular collapse of the TerraUSD stablecoin in May. And contagion spreads over risky crypto projects. Crypto firms such as Celsius, BlockFi, Voyager capital and Three Arrows Capital (3AC), among others, were exposed to insolvency fears
Late last month, Sam Bankman-Fried announced that it had provided some crypto firms that suffered due to the 3AC liquidation a line of credit worth $750 million. FTX offered a $750 million bailout to keep two crypto lenders solvent: $500 million for Voyager and $250 million for BlockFi.
On June 22, Voyager signed an agreement with Alameda Ventures for a revolving line of credit and access to additional capital to meet its customers’ liquidity needs.
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