The messy FTX narrative took an intriguing turn on Tuesday when FTX’s sibling firm, Alameda Research, slapped another bankrupt cryptocurrency lender, Voyager Digital, with a lawsuit.

Reuters reports that Alameda is attempting to recover approximately $446 million given to Voyager prior to its own bankruptcy filing. The payments are related to crypto debts secured by Alameda from Voyager prior to the latter’s bankruptcy filing in July.

In a court filing, FTX asserted that it paid Voyager almost $249 million in September and approximately $194 million in October on behalf of Alameda. In August, FTX also made a $3.2 million interest payment, court documents show.

Alameda Wants The Money Back

According to court records seen by Bloomberg, Alameda is attempting to recover the monies under bankruptcy laws designed to ensure that no creditor is favored over another.

Due to the proximity of those loan payments to the crypto exchange’s own bankruptcy declaration, those funds are subject for recovery and might be used to reimburse other FTX creditors, FTX’s complaint documents disclosed.

Legal counsels representing the Sam Bankman-Fried-led FTX claims that Voyager contributed to the downfall of the exchange by “knowingly or irresponsibly” diverting customer cash to Alameda. Incidentally, FTX had sought to acquire Voyager before it went belly up in November.

According to the court filings, Alameda referred to Voyager as a “feeder fund.” In addition, court documents reveal that little to no due diligence was conducted prior to investing retail client funds.

What’s A ‘Feeder Fund?’

A feeder fund is a form of investment fund into which hedge fund investors place their capital, which is then transferred to a master fund. The master fund, not the feeder fund, is eventually used by the hedge fund’s investment advisor to invest in the market.

FTX stated that Voyager’s business model was that of a feeder fund. It sought individual investors and placed their money in bitcoin investment funds such as Alameda and Three Arrows Capital with little or no due research.

On Monday, Alameda’s attorneys filed the following complaint in bankruptcy court:

“Largely lost in the (justified) attention paid to the alleged misconduct of Alameda and its now-indicted former leadership has been the role played by Voyager and other cryptocurrency ‘lenders’ who funded Alameda and fueled that alleged misconduct, either knowingly or recklessly.”

Clawing Back $446 Million, Plus Legal Fees

In its complaint, Alameda stated that Voyager had offered the company credit in a variety of digital currencies. Alameda stated that it intends to pursue the $446 million in damages on top of any further compensation, which might include legal fees.

The failure of FTX, formerly a $32 billion cryptocurrency exchange empire, has broken investor faith in cryptocurrencies. Market participants are attempting to determine the depth of the harm and how it will affect the sector in the coming years.

FTT Token Price Drops

Its founder, Sam Bankman-Fried, has been charged with fraud, and numerous high-ranking sidekicks, including Alameda Research CEO Caroline Ellison, have pled guilty to fraud.

Bankman-Fried, who is presently under house arrest at his parents’ home in California and is slated to stand trial in October, has denied all of the charges thrown against him.

Meanwhile, FTX’s native cryptocurrency FTT was trading at $1.90, retreating by nearly 5% in the last 24 hours at the time of writing, according to monitoring by Coingecko. In the last two weeks, FTT has lost around 24% of its value.

Featured image by Digital Dealer