Binance.US has cleared a major hurdle in its bid to acquire the assets of bankrupt crypto lender Voyager Digital in a deal valued at over $1 billion, following an overruling by Michael Wiles, a bankruptcy judge of the Southern District of New York. Even though the case still requires a confirmation order, the judge favored approving the deal.
However, Binance.US may still have to meet specific regulatory requirements before the transaction can be finalized. Nevertheless, following the ruling, Voyager’s VGX token saw a surge of more than 8% in the minutes afterward. Notably, 97% of Voyager creditors who responded to the proposal had endorsed it – possibly resulting in them recovering up to three-quarters of their holdings.
At the start of a lengthy hearing, creditors were given good news; lawyers representing Voyager stated that they could recover 73% of their assets – an increase from a previous estimate of 51%. However, Texas and New Jersey regulators warned that this figure could be drastically reduced if FTX’s Alameda Research successfully reclaims $445 million in loan repayments made before their bankruptcy filing in November.
On day four of the hearing, Judge Wiles ultimately decided that these regulators’ arguments did not outweigh the need to continue with Voyager’s restructuring. The court was presented with numerous testimonies addressing whether personal data would be given to Binance.US and why the transfer was considered a better choice than immediate liquidation.
Creditors questioned Voyager’s financial advisors about various matters, such as handling more complex forms of crypto assets and which regulations should be considered for customers residing in states like New York, Texas, Vermont, and Hawaii Binance.US is prohibited from operating.
According to Judge Wiles’ initial ruling on the case, any objections raised by the Securities and Exchange Commission were discarded. Previous court filings indicated that Voyager had also negotiated with the Federal Trade Commission to avoid obstructing an investigation of deceptive marketing practices.
The hearing began on Thursday last week and provided a platform for various parties and regulators to voice their objections to the proposed sale. However, Judge Wiles ultimately ruled that most of these objections were not strong enough or may have unnecessarily delayed proceedings. He stated that if government entities wanted to litigate whether the sale of Voyager’s VGX tokens was an offering of securities, then “they should have done so.” Moreover, based on the evidence presented at the hearing, Wiles had no choice but to rule that the transactions were legally permissible.
Parties raised additional alarm surrounding the potential for Voyager customer data, including Social Security numbers, to be shared with Binance.US and stored in offshore databases. In response, an attorney representing Binance.US stated that no Binance.US employees can access such sensitive information.
