According to recent bankruptcy filings by Voyager Digital, crypto trading firm Alameda Research borrowed heavily from the lending platform.
In an unusual turn of events, one of Voyager Digital’s borrowers came to its aid. Alameda Research, founded by crypto billionaire Sam Bankman-Fried, is a trading platform that serves as both a creditor and a borrower for Voyager. Last month, the company, which already owed Voyager Digital $377 million, extended a $500 million line of credit to the crypto broker.
Borrower, Lender, And Shareholder
Voyager Digital, a cryptocurrency brokerage firm, has filed for bankruptcy in New York City under Chapter 11 of the United States Bankruptcy Code. In its filing, the company claimed a $600 million defaulted loan to Three Arrows Capital, a liquidated crypto hedge fund (3AC). However, documents submitted to the court today show that Alameda Research is also on the company’s list of major debtors. According to the bankruptcy filings, it owes Voyager $377 million at a 1% to 5% interest rate. After the insolvent 3AC, Alameda Research is the second-largest borrower.
Alameda Research, on the other hand, has other roles in the Voyager Digital drama. In mid-June, the company extended Voyager a $485 million credit line to help it stabilize its problems. However, the latter had only withdrawn $75 million from the credit line, the maximum amount permitted in a 30-day period. Furthermore, with a stake of more than 9%, Alameda is one of Voyager’s largest shareholders.
FTX Saves Troubled Ventures
Bankman-Fried, who is also the CEO of cryptocurrency exchange FTX, believes Voyager’s bankruptcy filing will be a setback for Alameda. He has, however, admitted that quick investments in distressed assets may result in the occasional loss.
He remarked, If your strategy for extending a lifeline to struggling businesses results in you never doing it to a company that declares bankruptcy, you probably weren’t doing your job.
The newly formed FTX Venture has set aside $2 billion to assist ventures in need of liquidity.
The chain of destruction was the result of a domino effect that began in June with the catastrophic crash of the Terra (LUNA) token. The debacle completely destabilized 3AC, which had a close relationship with the stablecoin and a lot of exposure to it, resulting in its liquidation. This resulted in 3AC defaulting on its $670 million loans from Voyager, forcing it to seek reorganization under Chapter 11 of the Bankruptcy Code.
Source link
