The bankruptcy judge on Voyager Digital’s case has reportedly scolded the United States securities regulator over its ambiguous reasoning for objecting to the crypto lending firm’s proposed sale to Binance.US.
At a March 2 hearing in a New York court, U.S. 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 it had over the deal, according to a Reuters report.
The court was considering a restructuring plan announced on Dec. 19 to bring Voyager out of Chapter 11 bankruptcy that 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 bid for its assets.”
The SEC, however, filed an objection to the sale on Feb. 22, claiming aspects of the restructuring plan could breach securities laws, namely the crypto transactions that will need to happen to rebalance funds to redistribute to Voyager account holders.
In court, SEC attorney William Uptegrove offered a reserved answer to Judge Wiles when asked if the regulator believes the plan violated the law, saying:
“We can’t take a position at this point. The SEC is a deliberative body, and its process is a nonpublic one by federal law.”
Wiles hit back, saying “deliberative is one thing, but what have you done?” and added, “if there are reasons to be concerned here, I need to hear 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
The sale requires court approval, along with the go-ahead from the SEC and the Committee on Foreign Investment in the United States (CFIUS), which is probing the deal to review if it will entail a foreign investment and raise national security concerns.
Judge Wiles is set to hear continued arguments on the bankruptcy plan on March 3.
Related: FTC announces investigation into Voyager’s ‘deceptive and unfair marketing’ of crypto
The proposed Binance.US plan would transfer Voyager customers to the crypto exchange. Those customers would then be able to withdraw their funds for the first time since the platform filed for bankruptcy last July.
Customers would reportedly recover over 70% of their deposited value as of the time of the bankruptcy. In a poll of 61,300 account holders with claims against the crypto lender, the plan was favored by 97% of Voyager’s customers.