- As the United States Federal Trade Commission maintains an investigation into bankrupt crypto lender Voyager, authorities have opposed Binance’s purchase of its assets.
- The FTC believes the purchase would legally bar the pool from accountability for “actual fraud, willful misconduct, or gross negligence.”
Digital assets are generally under constant scrutiny by authorities and regulators, as they continue to cause great doubts because they are not centralized. But without a doubt, this scrutiny hardened as a result of the collapse of several crypto firms last year, which are also under the watchful eye of the authorities.
In this regard, there is a current case that illustrates this situation well, since The US Federal Trade Commission (FTC) recently said it is investigating bankrupt lender Voyager Digital, according to a court file from the past February 22.
Voyager is under investigation by the FTC
In this sense, The FTC pointed out that it is investigating “certain acts and practices” by Voyager which constitute “deceptive and unfair marketing of cryptocurrency to the public.”
Therefore, given the ongoing investigation, The regulator opposed Voyager Digital’s third attempt at a bankruptcy restructuring plan, consisting of Binance.US’s planned acquisition of Voyager’s assets, by arguing that the sale could “interfere with the causes of action of a government unit such as the FTC“, Besides that the purchase would legally bar the consortium from liability for “actual fraud, willful misconduct or gross negligence.”
“The FTC has initiated an investigation into certain acts and practices of the Debtors and the Debtors’ employees, directors and officers, for their deceptive and unfair marketing of cryptocurrency to the public”points the presentation.
Voyager could go unpunished
The reason why the FTC has opposed that the plan be accepted, at least as currently written, in theory would “release” Voyager and its employees from claims related to possible fraud, since it would prevent the FTC from taking legal action or issuing fines against Voyager and its former employees.
Therefore, the regulator wants the court to throw out sections of the proposal that could allow Voyager Digital or its employees to get away with it. In this regard, FTC attorney Katherine Johnson called the plan a “disguised layoff.”
“By not excluding, among other things, false pretenses and false representations, the release can be read as interfering with the causes of action of a government unit such as the FTC, thereby inhibiting the agency’s ability to process your claims.”, argued the FTC.
Why does the FTC disagree with Voyager’s plan?
Although we previously mentioned that the FTC opposes the Voyager company’s plan because it could exempt it from liability, we must specify what specifically the regulator is referring to.
According to the crypto firm’s plan, it is estimated that both Voyager’s clients and creditors will be able to receive a maximum recovery of 51 percent of their assets.
Likewise, the aforementioned plan specifies that any person or entity that has a legal claim against Voyager and that has a date prior to the confirmation of its restructuring plan, automatically “swill be permanently barred from the Effective Date and after the Effective Date from interfering with the use and distribution of the Debtors’ assets in the manner contemplated by the Plan.”
To understand a bit the reason for bankruptcy, it must be said that the crypto consortium was affected by the collapse of Three Arrows Capital, or 3AC. As a consequence, the firm filed a notice of default on the outstanding loans of 3AC, which at that date exceeded $673 million dollars. This was only the beginning of the end, as a few days later, Voyager filed for bankruptcy and began its restructuring process.
About, Bankruptcy judge Michael Wiles gave conditional approval to Voyager’s turnaround plan last January 13thin addition to noting that a hearing was scheduled to confirm said plan on March 2 in Manhattan.
For its part, Voyager Digital, a firm that filed for Chapter 11 bankruptcy protection on July 6, unveiled its first restructuring plan last August, the second in October and a third in December.
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