In the wake of Voyager Digital’s declared bankruptcy, FTX is proposing a comeback plan for customers who were burned by the bankruptcy. It is yet another attempt by the exchange to rush to the aid of struggling crypto companies.
FTX designs recovery plan for Voyager customers
Last Friday, the FTX exchange proposed to offer liquidity to customers of cryptocurrency lender Voyager Digital, which went bankrupt.
JUST IN: Voyager Digital says the restructuring offer from FTX and Alameda is a "low-ball bid."
— Watcher.Guru (@WatcherGuru) July 25, 2022
Voyager Digital had filed for bankruptcy on 6 July, after being caught up in the bankruptcy of Terra first, and then hedge fund Three Arrows Capital, to which Voyager had made a $650 million loan that the fund had failed to repay.
The CEO of Voyager, Stephen Ehrlich, had stated in a note:
“The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now”.
To overcome its difficulties, Voyager had signed an agreement with the trading company Alameda Ventures, founded by FTX CEO Sam Bankman-Fried, for a revolving line of credit. Alameda, with this line of credit, would be Voyager’s largest single creditor, with unsecured loans of $75 million.
FTX’s big move
Now comes the announcement that FTX would be working with West Realm Shires, to allow Voyager customers to set up new accounts on FTX, with a cash advance guaranteed by the exchange.
Voyager customers who accept the proposed offer would have an opening cash balance funded by FTX and Alameda. This money would be available to them immediately for withdrawal or to be invested to purchase digital currencies on the exchange.
Bankman-Fried, said in a press release:
“The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business – a way that allows customers to obtain early liquidity and reclaim a portion of their assets without forcing them to speculate on bankruptcy outcomes and take one-sided risks”.
FTX also indicated that they will not purchase the loans Voyager made to hedge fund 3AC, which was also declared bankrupt this month.