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Voyager Digital creditors gazumped, Binance acquisition thrown into doubt

Published: 22:52 28 Mar 2023 AEDT

Voyager Digital logo, Judge's gavel and crypto coins
Voyager Digital entered Chapter 11 bankruptcy protection in July 2022 in the height of the crypto winter

Manhattan District Judge Jennifer Rearden has thrown up a roadblock for cryptocurrency exchange Binance’s proposed US$1.3bn acquisition of bankrupt crypto broker Voyager Digital (CSE:VYGR, OTCQX:VYGVF).

Intended to be completed through Binance’s US subsidiary, the acquisition was initially cleared by the Bankruptcy Court, but has since garnered appeals from the Department of Justice’s bankruptcy watchdog.

Voyager was a high-profile victim of the ‘crypto winter’ which caused the collapsed of many once-prominent crypto firms, including Celsius Network, BlockFi and eventually FTX.

Judge Rearden upheld the appeal on Monday to the chagrin of Voyagers’ Official Committee of Unsecured Creditors, which promised to “aggressively oppose the government’s efforts” to halt the deal.

Voyager Digital filed for Chapter 11 bankruptcy protection in July 2022 and has since been seeking ways to repay its creditors, with the Binance.US acquisition seen as a viable path forward.

But US regulator the Securities and Exchange Commission (SEC) said the deal could potentially be a violation of US securities law.

US Bankruptcy Judge criticised the SEC for holding up the sale, stating on March 7: “I cannot put the entire case into indeterminate deep freeze while regulators figure out whether they believe there are problems with the transaction and plan.”

Unfortunately for out-of-pocket creditors, the sale now faces indefinite delays.

Binance.US is facing scrutiny for more than one regulator this week.

The US Commodity Futures Trading Commission (CFTC) also accused Binance chief executive Changpeng ‘CZ’ Zhao and chief compliance officer Samuel Lim of the “wilful evasion” of US commodities law.

The CFTC has specified that Binance’s facilitation of commodity futures, options, swaps and retail commodity transactions to US customers violates the Commodity Exchange Act.

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