US government appeals approval of Voyager sale to Binance.US

FILE PHOTO: Representations of cryptocurrencies and Voyager Digital logo are seen in this illustration taken, July 7, 2022. REUTERS/Dado Ruvic/Illustrations/File Photo

(Reuters) - The U.S. Department Justice has appealed a court order approving Voyager Digital's bankruptcy plan, creating a new hurdle for 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 U.S. Attorney's Office for the Southern District of New York and the Office of the U.S. Trustee, the Department of Justice's bankruptcy watchdog, filed a notice of appeal late Thursday in U.S. bankruptcy court in Manhattan. It did not detail why they were appealing.

U.S. Bankruptcy Judge Michael Wiles, who is overseeing Voyager's Chapter 11 bankruptcy process, had approved Voyager's restructuring plan, which is built around the acquisition by crypto exchange Binance.US, at a hearing on Tuesday after overruling objections from the U.S. Securities and Exchange Commission and DOJ.

Voyager, Binance.US and the DOJ did not immediately respond to requests for comment on the appeal.

Lawyers for the U.S. Trustee and U.S. Attorney's office spoke up at hearings to consider 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 bringing regulatory enforcement actions or criminal charges if misconduct was discovered later.

Wiles disagreed, saying that Voyager and its employees should not be penalized for carrying out a court-approved sale to Binance.US. If the DOJ or any government agency had evidence of misconduct specifically related to the bankruptcy, they should have presented it in court, Wiles said.

In approving the plan, Wiles had also overruled an objection from the SEC, saying that it attempted to cast doubt on the legality of the sale without presenting any evidence that Voyager or Binance.US had violated securities laws.

Binance.US has agreed to pay $20 million in cash to Voyager, and to take on crypto assets deposited by Voyager customers. The 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 still could pull out of the Binance.US deal and make an effort to return customer funds without outside help.

Voyager filed for bankruptcy in July, months after the crash of major crypto tokens TerraUSD and Luna sent shockwaves across the digital asset industry.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Paul Simao)

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!


Next In Tech News

Books and plants make you look good on Zoom, British research shows
BMW to offer highly automated driving from the end of the year
Preview: Killing goblins with the help of Pawns in ‘Dragons’ Dogma II’
Review: 'The Cursed Crew' for PC/console – Dead pirates go on a treasure hunt
Apple identifies issues causing overheating in the iPhone 15
Your ‘karma’ can make you money on Reddit
In Latin America, data centre plans fuel water worries
‘Not stupid’: China girl determined to find husband who doesn’t expect her to do housework in contrast to situation at home, delights social media
Elon Musk's X Corp in another legal fight over unpaid rent, this time as plaintiff
Forget Harry Styles. Riot Games is one of LA’s biggest stars headlining the Kia Forum�

Others Also Read