Binance.US can go ahead with plan to acquire Voyager Digital’s assets, judge rules
Binance.US cleared a major hurdle in its bid to acquire the assets of bankrupt crypto lender Voyager Digital in a deal worth over $1 billion after Michael Wiles, a bankruptcy judge in the Southern District of New York, overruled the various objections to the proposed acquisition.
While the judge said he would still work through the confirmation order, he indicated he was in favor of approving the deal. Binance.US may still have to clear certain regulatory hurdles before the deal can be finalized. Voyager’s VGX token rose over 8% in the minutes following the ruling.
The plan, put together after former bidder FTX itself filed for bankruptcy in November, had been backed by 97% of Voyager creditors who responded to the proposal and could see them get back almost three-quarters of their holdings.
The lengthy hearing started with good news for creditors, with Voyager lawyers saying creditors could potentially achieve a recovery of 73% – with a bullish crypto market boosting an earlier estimate of 51%.
However, regulators from Texas and New Jersey have warned that those benefits could be significantly dampened if FTX’s Alameda Research succeeds in recouping $445 million in loan repayments ahead of its own bankruptcy in November.
During day four of the hearing on Tuesday, Judge Wiles ultimately ruled that those regulators’ objections did not outweigh the need to proceed with the restructuring of Voyager.
The court heard from a number of witnesses on complex topics such as whether personal data would be handed over to Binance under the deal, and why the transfer represented a better deal for creditors than immediate liquidation.
Creditors asked Voyager’s financial advisors about points such as how to treat more exotic types of cryptoassets, and how to handle customers in states like New York, Texas, Vermont and Hawaii, where regulators don’t allow Binance to operate.
Other obstacles to the deal, mainly placed by cautious regulators, appear to have fallen away. Early in the hearing, Judge Michael Wiles took a dim view of objections from the Securities and Exchange Commission, and earlier court documents suggested Voyager struck a deal with the Federal Trade Commission to avoid interfering with an investigation.
The hearing, which began last Thursday, also gave various parties and regulators a chance to object to the proposed sale. The judge ultimately ruled that many of these objections either did not make a strong case or would have stalled the proceedings unnecessarily.
“If the government wants to sue that” Voyager’s sale of VGX tokens was an offering of securities, it should have done so, he said, referring to an SEC lawyer’s statement that the proposed sale could have securities laws. However, regulators chose not to do so and, based on the evidence presented at the hearing, Wiles would have had no choice but to determine that the transactions were perfectly legal, he added.
Other concerns raised by the parties included the possibility that Voyager customer data, including social security numbers, would be shared with Binance.US and could be stored in offshore databases. A lawyer representing Binance.US said no Binance employee would have access to this type of information.
Jamie Crawley contributed reporting.
UPDATE (March 7, 2023, 22:10 UTC): Adding VGX token surge.
