According to Bloomberg recently reportUS regulators are again trying to disrupt the sale of bankrupt crypto lender Voyager Digital to major crypto trading platform Binance.US.
Although U.S. Bankruptcy Judge Michael Wiles, who is overseeing Voyager’s Chapter 11 bankruptcy proceedings, has approved Binance.US’s acquisition of Voyager, the country’s regulators have opposed the sale.
According to the report, other elements of the agreement may be enforceable, but not the legal protections provided in Voyager’s Chapter 11 filing. In addition, U.S. Bankruptcy Judge Michael Wiles has agreed to hold a hearing on Wednesday to decide whether to suspend Voyager’s compensation provisions.
Voyager Deal Blocked by Regulators?
Securities and Exchange Commission (SEC) lawyers claim that parts of Voyager’s deal and plan could violate federal law if completed. According to reports, the SEC and other federal prosecutors also alleged that the bankruptcy plan could determine the future of efforts to control the cryptocurrency market, the appeal was approved by US judge Wiles.
In addition, the SEC stated that the redemption token could be an unregistered securities offering, stating that the American arm of the world’s largest crypto exchange operates an unregulated securities exchange.
The SEC’s objection also noted the report in February about the US agency’s investigation into Binance.US and the crypto exchange Binance, in which Binance’s CEO, Changpeng “CZ” Zhao, stated that Binance.US works as an independent partner.
In addition, New York’s top financial regulator and New York Attorney General Letitia James, also opposed the filing of the deal in February. The New York Department of Financial Services (NYDFS) stated that Voyager “illegally operated a virtual currency business in the state without a license,” according to Reuters report.
Binance has agreed to pay $20 million in cash to Voyager’s crypto creditors and take over crypto assets deposited by Voyager’s former customers. The lender’s crypto assets were previously valued at $1.3 billion in February, making up most of the plan’s value.
Despite all the requests and continued hard actions by state and federal regulators, which highlight the purpose of the US regulator’s approach to the crypto industry, US Judge Michael Wiles intends to proceed with the sale to Binance.US, calling the SEC to give reasons behind the sale of the lending company to the crypto exchange.
Additionally, Michael Wiles said that authorizing the SEC to block the sale would “hang a sword over the head of anyone who would do this transaction.”
In January, Voyager estimated that its customers could recoup half of the company’s debt under the plan. Voyager attorney Christine Okike told Wiles that the recovery estimate has increased by 73% based on the recent upward trend in the cryptocurrency market.
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