The United States DOJ is contesting legal protections granted to individuals involved in Voyager Digital’s proposed sale of digital assets to Binance.US. Moreover, they argue that the court exceeded its authority in granting the protections. Therefore, the DOJ wants to remove the provision preventing the government from pursuing those involved in the sale.
The challenge was made in a motion filed on March 14 in a New York bankruptcy court by U.S. trustee William Harrington and other government attorneys. They assert that the provision would hinder the government’s “ability to enforce its police and regulatory powers.”
U.S. officials do not oppose other parts of the proposed sale. However, they claim that the provision protects those involved from personal liability and is “highly improper” and “extraordinary.”
The court approved the provision on March 7 after finding that 97% of Voyager customers supported the plan, according to a February 28 filing.
On March 6, the U.S. Securities and Exchange Commission (SEC) also objected to the sale. It stated that the repayment token would constitute an unregistered security offering. As such, Binance.US is operating an unregulated securities exchange.
The DOJ motion requests a two-week delay of the sale to allow time for an appeal to be filed. A hearing on the matter is scheduled for March 15 at 2:00 pm Eastern Time.
The sale is expected to provide Voyager creditors with a recovery rate of approximately 73% of the value of their funds, according to the latest estimates. However, the DOJ’s challenge could potentially impact the sale’s outcome.
The DOJ’s objection to the legal protections in the Voyager sale to Binance.US underscores the government’s commitment to enforcing regulatory oversight in the cryptocurrency industry.
As the industry continues to evolve, regulatory bodies will likely scrutinize sales of digital assets to ensure compliance with securities laws and protect investors’ interests.
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