The cryptocurrency industry was alight on Mar. 7 as Bankrupt crypto lender Voyager Digital saw its proposals to sell over $1 billion worth of assets to Binance.US approved by United States Bankruptcy Judge Michael Wiles. Confirmation of the arrangement saw Voyager’s token (VGX) surge by 32.9%, from $0.37 to $0.50 in the four hours following the news.
The approval came after four days of arguments presented by Voyager and the United States Securities Exchange Commission (SEC) as to whether the redistribution of the funds from Voyager to Binance.US would violate U.S. securities laws, which Judge Wiles ultimately rejected.
It noted that 97% of 61,300 Voyager account holders had been found to favour the current Binance.US restructuring plan according to a Feb. 28 filing. It also followed Judge Wiles’s statement that no U.S. agency, including the SEC, would be allowed to punish Voyager executives in relation to the issuance of a potential bankruptcy token.
The trading platform will now decide whether to complete the Binance.US sale or liquidate its own funds and turn proceeds over to Voyager account holders, depending on its view of ongoing investigations that Binance.US is entangled in with federal authorities. Voyager’s lead investment banker, Brian Tichenor, said in a March 3 court hearing if the restructured plan was executed, customers would receive $100 million more than if Voyager decided to liquidate itself.
The sale, however, may still have to hurdle certain regulatory obstacles before it can be finalised, such as gaining approval from the Committee on Foreign Investment in the United States (CFIUS). It was revealed in court that CFIUS had filed a notice indicating “one or more transactions contemplated” by Voyager could be subject to a review, resulting in possible blocks or delays.
Previously, objections to the acquisition proposal from Alameda Research, the Securities and Exchange Commission and other bodies were rebutted by the bankrupt lender on Jan. 8, with Voyager claiming that the transaction is in the best interest of its creditors and the objections “fail to put forward any factual or legal support” for their arguments.
As the hearing came to an end on Tuesday and Judge Wiles overruled the various objections to the proposed acquisition, Binance.US has become the frontrunner for the purchase of Voyager Digital’s assets. While the judge said he would still work through the confirmation order and successfully enabled the deal to proceed, he also warned of the complexities that may arise in the process, with topics such as the handling of exotic crypto assets and the potential for customers’ personal data, including Social Security Numbers, to be handed over to Binance.US.
If it’s approved, creditors could potentially make a 73% recovery, with a bullish crypto market raising a previous estimate of only 51%. This could depend on the outcome of Voyager’s bankruptcy court dispute with FTX’s sister company Alameda Research, which is demanding a return of what was originally lent out and which Voyager has agreed to reserve $445 million for in case it loses.
The news of the court approval saw a surge in the prices of the VGX token, providing investors with one last glimmer of optimism before the final decision is released, with the public waiting in anticipation.
Ultimately, the decision may rest on the ability of the involved parties to clear the various hurdles of regulatory approval, with the outcomes of CFIUS review, the court dispute between Voyagers and Alameda Research, and the potential for customer data to be overseen all factors that could potentially delay or fully block the deal.
Until a concrete decision is released, all the public can do is specualte, as Voyager and Binance.US continue to work through the regulatory obstructions in their bid for the sale of assets.