U.S. Department of Justice Appeals Court Decision Approving Voyager Acquisition
The U.S. Department of Justice (DOJ) is appealing a recent court decision approving Binance.US’ acquisition of crypto lender Voyager Digital.
The DOJ filed an appeal in a new court filing, challenging New York Judge Michael Wiles’ decision to allow Voyager to sell $1.3 billion worth of assets to Binance.US, the U.S. branch of the world’s largest crypto exchange platform by volume.
The deal also included a $20 million payout to customers of Voyager, which went bankrupt last year after troubled crypto firm Three Arrows Capital (3AC) failed to pay back a loan worth hundreds of millions of dollars. The acquisition deal between Voyager and Binance.US would allow Voyager to pay back its customers, who have been waiting to resolve the bankruptcy case.
Earlier this week, Judge Wiles rejected the U.S. Securities and Exchange Commission’s (SEC) argument that the deal between the two companies should be stopped because it could violate securities law. According to the SEC, redistributing the firm’s funds to account holders may violate the Securities Act of 1933.
The SEC argued that “the transactions in crypto assets necessary to effectuate the rebalancing, the redistribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale or delivery after sale of securities.”
However, Judge Wiles said he doesn’t believe this is a valid reason for putting the deal on hold. He stated that:
“I cannot put the entire case into [an] indeterminate deep freeze while regulators figure out whether they believe there are problems with the transaction and plan.”
If the deal breaks apart or is successfully stymied by regulators, Voyager may still choose to liquidate on its own to pay back its customers. However, according to previous reports, Voyager’s lead investment banker Brian Tichenor says that the deal with Binance.US would give the customers about $100 million more.
The appeal by the DOJ means that the acquisition deal will continue to be in limbo, with no clear resolution in sight. The case highlights the regulatory uncertainty in the cryptocurrency industry as regulators and government agencies grapple with how to oversee and regulate the fast-evolving sector.
The acquisition deal between Voyager and Binance.US could have significant implications for the future of the cryptocurrency industry, as it could set a precedent for how similar deals are handled in the future.
The outcome of the case will be closely watched by crypto investors and industry insiders, who are eager to see how regulators will address the complex legal issues surrounding the ownership and transfer of cryptocurrency assets.