U.S. Bankruptcy Judge Criticizes SEC's Vague Doubts on Crypto Lender Voyager Digital's Binance.US

A bankruptcy judge in the United States has slammed the Securities and Exchange Commission (SEC) for raising vague concerns about crypto lender Voyager Digital's proposed sale to Binance.US, claiming that the SEC had essentially asked to “stop everybody in their tracks” without explaining how to address its concerns.

U.S. Bankruptcy Judge Michael Wiles made the comments during a court meeting in New York to examine Voyager Digital's restructuring plan, which would sell its assets and move its clients to crypto market Binance.US. The transfer, which Voyager rates at $1.3 billion based on current crypto prices, cannot complete until it receives final clearance from the SEC and the Committee on Foreign Investment in the United States (CFIUS), both of which have expressed reservations about the transaction.

SEC Probes Voyager's Crypto Loans for Possible Illegal Stock Sales

The Securities and Exchange Commission is presently examining whether Voyager's crypto loan operation involved the selling of illegal stocks. In court papers, Voyager has expressed worry that it cannot show that the Binance trade, or any other crypto transaction, conforms with US securities law.

When Wiles pushed SEC counsel William Uptegrove on whether the Voyager transaction broke US stock rules, Uptegrove did not have a definitive response. “At this time, we can't take a stance,” Uptegrove said. “The SEC is a deliberate group, and its procedure is, by federal rule, nonpublic.”

Wiles was dissatisfied with that answer, claiming “It's one thing to be deliberate, but what have you done？ If there are grounds to be worried, I need to know what they are.”

Binance-US Deal: Voyager Clients Get Access to Funds After Bankruptcy

The Binance deal involves a monetary payout of $20 million and an arrangement to move Voyager's clients to Binance.cryptocurrency US's market. According to court papers, the digital assets placed by Voyager clients account for the majority of the deal's value. Once Voyager users have Binance.US accounts, they will be able to transfer funds for the first time since their accounts were frozen last summer.

Voyager declared bankruptcy in July 2022, months after the collapse of big crypto currencies TerraUSD and Luna shook the digital asset industry. Customers are expected to recoup 73% of the worth of their assets at the time of Voyager's insolvency declaration.

CFIUS did not officially protest to the Binance transfer, but it did caution that its continuing evaluation of national security worries could result in the transaction being blocked. Binance. US has stated that it is “totally autonomous” of its foreign parent firm Binance, which is controlled by Changpeng Zhao, a Chinese-born Singaporean.

Finally, a U.S. bankruptcy court faulted the SEC's nebulous worries about Voyager Digital's planned transfer to Binance.US, saying the regulator had basically requested to “halt everybody in their tracks” without clarifying how to resolve its concerns. The transfer cannot complete until it receives ultimate clearance from the SEC and CFIUS, both of which have expressed reservations about the transaction. The SEC is presently examining whether Voyager's crypto loan company involved the selling of unlicensed stocks and has expressed worry that Voyager will be unable to demonstrate that the Binance deal, or any other crypto transaction, conforms with US securities law.

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