A bankruptcy judge has declared that the United States Securities Exchange Commission (SEC) can’t fine executives involved in Voyager Digital, should the company issue bankruptcy tokens as part of its plan to repay affected customers. That marks an exciting plot twist in this ongoing debacle.
SEC Gets Refuted In Court
Judge Michael Wiles announced this on March 6th. He did so after the SEC argued that the proposed repayment token would constitute an unregistered security offering. Furthermore, the SEC claimed that Binance.US, which would be purchasing $1 billion worth of Voyager assets, was operating an unregulated securities exchange.
The SEC has also objected to legal protection which would prevent any U.S. agency from bringing any claim against any person on account of or relating to the restructuring transactions.
That would effectively shield restructuring advisers and executives involved in Voyager’s bankruptcy from lawsuits if they implement the bankruptcy plan. However, the plan has to be court-approved.
The SEC described these provisions as “extraordinary” and “highly improper.” However, Judge Wiles feels that giving the SEC such authority would “leave a sword hanging over the heads of anybody who’s going to do this transaction.”
The SEC lawyer, Therese Scheuer, argued that the legal protections were too broad. Moreover, she worries those protections would grant Voyager employees and lawyers permission to violate securities laws. After debate, Voyager’s lawyers agreed to narrow the scope of legal releases.
A Big Step For Voyager and Its Customers
Voyager, a trading platform, filed for bankruptcy on July 5th, 2022. The filing attempted to restructure the firm and “return value” to over 100,000 customers.
The court has been considering a restructuring plan to bring Voyager out of Chapter 11 bankruptcy since December 19th. This plan involves Binance.US acquiring Voyager’s assets for $1.02 billion. Voyager claims that sum represents the “highest and best bid for its assets.”
The SEC objected to the sale on February 22nd, claiming that aspects of the restructuring plan could breach securities laws. However, the regulator was criticized over its ambiguous reasoning for the objection in a court hearing on March 2nd. A court filing on February 28th found that 97% of 61,300 polled Voyager account holders favored the current Binance.US restructuring plan.
The SEC’s objections and the subsequent ruling have caused significant uncertainty for Voyager and its customers. Nevertheless, it remains to be seen whether Voyager’s bankruptcy token plan will be approved. Even so, the company’s restructuring efforts may not be successful.
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