US authorities appeal approval of Voyager sale to Binance.US
By Dietrich Knauth
(Reuters) – The U.S. Justice Department has appealed a court order approving Voyager Digital’s bankruptcy plan, creating another obstacle to the crypto lender’s plan to sell its assets and transfer its customers to Binance.US in a deal valued at $1.3 billion.
The US Attorney’s Office for the Southern District of New York and the Office of the US Trustee, the Department of Justice’s bankruptcy watchdog, filed a notice of appeal with the US Bankruptcy Court in Manhattan late Thursday. It did not specify why they were appealing.
US Bankruptcy Judge Michael Wiles, who is overseeing Voyager’s Chapter 11 bankruptcy proceedings, had approved Voyager’s restructuring plan, which is built around the acquisition of crypto exchange Binance.US, at a hearing on Tuesday after overruling objections from the US Securities and Exchange Commission and the DOJ.
Voyager, Binance.US and the DOJ did not immediately respond to requests for comment on the appeal.
Attorneys for the US Trustee and the US Attorney’s office argued during hearings to review Voyager’s bankruptcy plan to oppose provisions Voyager included to protect employees from potential legal claims resulting from actions taken during the bankruptcy. They argued that Wiles’ order approving the plan was written too broadly, potentially preventing the government from initiating regulatory enforcement actions or criminal charges if misconduct was discovered later.
Wiles disagreed, saying that Voyager and its employees should not be penalized for conducting a court-sanctioned sale to Binance.US. If the DOJ or another government agency had evidence of wrongdoing specifically related to the bankruptcy, they should have presented it in court, Wiles said.
In approving the plan, Wiles also overruled an objection from the SEC, which it said sought to cast doubt on the legality of the sale without presenting evidence that Voyager or Binance.US had violated securities laws.
Binance.US has agreed to pay $20 million in cash to Voyager, and to assume crypto assets deposited by Voyager customers. Those assets, valued at $1.3 billion in February, account for the bulk of the deal’s valuation, according to Voyager.
Last week, Voyager said it could still pull out of the Binance.US deal and make efforts to return customer funds without outside help.
Voyager filed for bankruptcy in July, months after the crashes of major crypto tokens TerraUSD and Luna sent shockwaves through the digital asset industry.
(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Paul Simao)
