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  • K Kim and M Bacina

US government appeals Voyager sale



Binance.US's acquisition of certain assets of Voyager Digital Holdings Inc, the bankrupt cryptocurrency brokerage firm, gained approval from Judge Michael Wiles of the U.S. Bankruptcy Court in New York last week.


Under its chapter 11 bankruptcy plan, Voyager was permitted the option of being acquired by Binance.US or liquidating its assets and distributing it to creditors. Binance.US had previously offered to take control of the crypto assets deposited by Voyager’s users and make a $20 million cash payment to the bankrupt crypto brokerage.


However, US authorities, principally the SEC, have consistently sought to block the $1 billion acquisition, and have now appealed against Judge Wiles’ approval of the deal, with the lawyers for the SEC submitting that Voyager’s bankruptcy plan and the acquisition would be contrary to federal securities law.


In February 2023, New York’s financial regulator and Attorney General warned against the sale of Voyager, with the New York Department of Financial Services alleging that Voyager had:

Illegally operated a virtual currency business within the state without a license.

Policy considerations, amongst other things, were raised by federal lawyers to argue that Voyager’s bankruptcy plan, if approved, could interfere with future policing efforts for the cryptocurrency markets.


Judge Wiles previously reflected his hesitance to block the deal as per the regulators’ warnings, commenting that giving the SEC the power to interfere with such sales would:

Hang a sword over the head of anyone who’s going to do this transaction.

At a further hearing, and then in a published judgment, Judge Wiles made some blistering comments about the SEC's lawyers submissions concerning the deal, saying:

in making its arguments, the Government has not even discussed any of the authorities that I cited, or the actual theory on which I relied...the evidence and argument before me during the confirmation hearing did not suggest there were any illegalities

Judge Wiles hence overruled the SEC's objections on the basis that their efforts to challenge the legality of the deal in light of federal securities laws were unsupported by evidence. The SEC's failure to give clear regulatory guidance with respect to cryptocurrency was also criticized:

If the Government has not already taken regulatory actions with respect to cryptocurrencies, or if it delays in taking any further regulatory actions, those delays will certainly not be attributable in any way to my order.

The judge finally reiterated his approval of the acquisition and denied the Government's request for a stay pending appeal on the grounds that further delay would be contrary to public interests.

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