The bankruptcy judge in the Voyager Digital case has chastised the US securities regulator for its ambiguous reasoning in opposing the proposed sale of the cryptocurrency lending firm to Binance.US.
In a March 2 hearing in a New York court, US bankruptcy judge Michael Wiles said the Securities and Exchange Commission had basically asked to “stop everybody in their tracks” without explaining how to address concerns he had about the deal, according to a Reuters report.
The court was considering a restructuring plan announced on Dec. 19 to lift Voyager out of Chapter 11 bankruptcy, which would see crypto exchange Binance.US acquire its assets for $1.02 billion, an option Voyager said at the time represented the “highest and best offer for its assets.”
The SEC, however, filed an objection to the sale on February 22, alleging that some aspects of the restructuring plan could violate securities laws, namely, the cryptocurrency transactions that will need to occur to rebalance the funds and redistribute them to Voyager account holders.
In court, SEC attorney William Uptegrove offered a reserved response to Judge Wiles when asked if the regulator believes the plan violates the law, saying:
“We cannot take a position at this time. The SEC is a deliberative body, and its process is not public under federal law.”
Wiles countered by saying, “Deliberative is one thing, but what have they done?” adding: “If there are reasons to worry, I need to hear the specifics.”
⚠️ Judge Wiles slamming the SEC rep about their objection. ⚠️
Says, (paraphrase) “You’re asking the debtor to prove that the cryptos being transacted are not securities, but you’ve given no regulatory guide as to what that is.”
— VGX Heroes (@VGX_Heroes) March 2, 2023
⚠️ Judge Wiles hit the SEC representative for his objection. ⚠️ It says (paraphrasing) “you are asking the debtor to prove that the cryptocurrencies being traded are not securities, but you have not given any regulatory guidance on what that is
The sale requires judicial approval, as well as the approval of the SEC and the Committee on Foreign Investments in the United States (CFIUS), that it is investigating the deal to see if it involves foreign investment and raises national security concerns.
Judge Wiles is scheduled to hear arguments on the bankruptcy plan on March 3.
The plan proposed by Binance.US would transfer Voyager clients to the crypto exchange. These customers could then withdraw their funds for the first time since the platform filed for bankruptcy last July.
Reportedly, clients would recover more than 70% of the value deposited at the time of bankruptcy. In a survey of 61,300 account holders with claims against the cryptocurrency lender, 97% of Voyager customers favored the plan.
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