FTX Proposes Joint Proposal to Bailout Bankrupt Voyager’s Customers

FTX crypto exchange announced on Friday that its plans to give Voyager Digital’s customers 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 part of their funds that were frozen more than three weeks ago. It is, however, unclear how much each customer will be able to receive.

As per the joint plan, Alameda Ventures will buy all of Voyager’s digital assets and digital asset loans, except Voyager’s loans to the bankrupt crypto hedge fund Three Arrows Capital.

Voyager’s clients could then get some of their funds if they open an account with FTX. Such customers could either make withdrawals of their cash balance immediately or use the funds to buy 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 customers did not choose to be bankruptcy investors holding 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 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.”

As per the joint proposal, FTX would not buy Voyager’s loans to Three Arrows Capital or others under litigation claims. The joint proposal expects Voyager to pursue its rights with regards to Three Arrows Capital matters and use any recoveries to supplement fund distributions to customers, 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 the bankrupt hedge fund firm Three Arrows Capital (3AC) for failure to make required payments on a loan.

Many recent problems within the crypto industry can be traced back to the spectacular collapse of TerraUSD stablecoin in May. And contagion spread across risky crypto projects. Crypto firms like Celsius, BlockFi, Voyager capital, and Three Arrows Capital (3AC), among others, became exposed to insolvency fears

Late last month, Sam Bankman-Fried announced that they had given some crypto firms who suffered due to 3AC liquidation a line of credit worth $750 million. FTX offered a bailout worth $750 million 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 gaining access to additional capital to meet its customers’ liquidity needs.

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