Bankrupt cryptocurrency companies FTX Trading and Voyager Digital Holdings have reached an agreement to settle their loan disputes, a move aimed at reimbursing creditors.
The protracted claims and disagreements between the two entities came to a close on Tuesday, resulting in the complete release of $445 million to Voyager, including accrued interest.
Voyager’s financial troubles were exacerbated by the collapse of the crypto hedge fund Three Arrows Capital (3AC), to which it had lent approximately 60% of its holdings.
In a motion filed on Tuesday, FTX, facing its own challenges, sought approval from a Delaware bankruptcy court for the agreement. The deal encompasses “mutual releases fully resolving all claims and disputes between and among” Voyager and FTX, as stated in the motion.
The genesis of the conflict traces back to a cryptocurrency loan extended by Voyager to Alameda Research Ltd., an FTX subsidiary, in October 2021. In January of the following year, Alameda and FTX initiated legal action against Voyager, seeking repayment of the loan. In response, Voyager filed claims totaling $130 million against FTX in June 2023, alleging breaches of the terms of the October 2021 loan agreement by Alameda. Following the settlement, both companies have agreed not to pursue further legal action against each other, contingent upon certain conditions, as outlined in the court filings.
Is There Hope on the Horizon for Voyager’s Creditors?
The recent successful agreement reached with FTX offers a glimmer of hope for investors who have found themselves in a precarious situation with their cryptocurrencies locked up on the Voyager platform.
According to counsel representing Voyager, the settlement achieved represents a particularly favorable outcome for the platform’s creditors, considering the risks, expenses, delays, and market uncertainties associated with continued litigation of the FTX Adversary Proceeding.
As a result of the settlement, a substantial sum of $450 million, along with accrued interest, is poised to be released in the near term. This infusion of funds holds the promise of providing relief to creditors, with the potential for a second distribution in the months ahead.
In addition to the positive developments, the filing issued a cautionary note to creditors regarding the prevalence of fraudulent activities targeting individuals associated with Voyager. The counsel emphasized the importance of remaining vigilant against scammers posing as representatives of Voyager. However, reassuringly, proactive measures have been implemented to address and mitigate these fraudulent schemes.
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