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According to a recent Bloomberg report, U.S. regulators are again attempting to interfere with the sale of the bankrupt crypto lender Voyager Digital to major crypto trading platform Binance.US.
Although U.S. Bankruptcy Judge Michael Wiles, overseeing Voyager’s Chapter 11 bankruptcy proceedings, has approved Binance.US’s acquisition of Voyager, the country’s regulators oppose the sale.
According to the report, other elements of the deal could go through, 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 halt Voyager’s indemnification provisions.
Voyager Deal Blocked By Regulators?
Securities and Exchange Commission (SEC) lawyers claim that parts of the deal and Voyager’s plan could violate federal law if fully consummated. According to the report, the SEC and other federal lawyers also alleged that the bankruptcy plan could determine future efforts to control the cryptocurrency market, appealing the approval of U.S. judge Wiles.
In addition, the SEC argued that the redemption token could constitute an unregistered securities offering, claiming that the American arm of the world’s largest crypto exchange is operating an unregulated securities exchange.
The SEC’s objection also cited reports in February of U.S. agencies’ investigations into Binance.US and the Binance crypto exchange, to which the CEO of Binance, Changpeng “CZ” Zhao, claimed that Binance.US works as an independent partner.
Moreover, New York’s top financial regulator and New York Attorney General Letitia James, have also objected to the deal filings in February. The New York Department of Financial Services (NYDFS) stated that Voyager “illegally operated a virtual currency business within the state without a license,” according to a Reuters report.
Binance has agreed to pay $20 million in cash to crypto lender Voyager 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 valuation.
Despite all the demands and the continued crackdown by state and federal regulators, which highlights the purpose of the U.S. regulators’ approach to the crypto industry, U.S. Judge Michael Wiles intends to proceed with the sale to Binance.US, calling out the SEC for its reasoning behind the sale of the lending company to the crypto exchange.
Additionally, Michael Wiles said that giving the SEC such authority to block the sale would “hang a sword over the head of anyone who’s going to do this transaction.”
In January, Voyager estimated that customers could recover half of what the lending company owes them under the plan. Voyager attorney Christine Okike told Wiles that the recovery estimate had increased by 73% based on the recent upward trend of prices in the cryptocurrency market.
Featured Image from Unsplash, chart from TradignView.com