- U.S. government is arguing that $1 billion transaction made by Binance.US to purchase assets of Voyager should be placed on hold
- In order to file an appeal, a two-week delay on the court’s approval has been requested
The plan by insolvent lender Voyager Digital to sell its digital assets to cryptocurrency exchange Binance.US includes a clause that would preclude U.S. authorities from bringing legal action against anyone connected to the sale.
According to a motion filed by U.S. Trustee William Harrington and other government lawyers before a New York bankruptcy court, “the court improperly exceeded its statutory power” in authorizing the pardoning. In fact, they have asked for a two-week hold on the court’s approval of the transaction so that they could submit an appeal.
What does the Provision say?
The clause, which the court authorized on March 7 after finding that 97% of Voyager customers supported the idea, was designed to shield those involved in the sale from being held personally accountable for its implementation.
Despite not objecting to other aspects of the proposed transaction, U.S. authorities claim the provision would make it more difficult for the government to “exercise its police and regulatory responsibilities.”
The decision was made in response to an appeal from the U.S. Trustee, a division of the Department of Justice in charge of bankruptcy cases. The division is concerned that the agreement would essentially exonerate Voyager and its employees from violations of securities or tax laws.
“The Court cannot tell the Government to speak now or forever hold its peace before Voyager and Binance.US are wed,” according to Damian Williams’ filing as U.S Attorney. Nothing in Bankruptcy Law allows courts to absolve parties from responsibility to the Government for actions taken in the past and in the future, it added.Â
Williams argued that until appeals are resolved in higher courts, approval of the arrangement — or at least those portions that restrict the government’s capacity to execute the law — should be suspended.
The sale was allowed last week by New York bankruptcy judge Michael Wiles. He had previously shown significant skepticism towards the Securities and Exchange Commission’s claims that Voyager’s VGX token would be unregistered securities.
What to expect?
On March 6, the Securities and Exchange Commission (SEC) objected to the plan as well, citing the “extraordinary” and “highly improper” exculpation provision. The SEC claimed that Binance.US is running an unregistered securities exchange and that the repayment token would be an unregistered security offering.
According to the most recent projections, the strategy is anticipated to result in the creditors of Voyager receiving about 73% of the value of their money back.
