U.S. Bankruptcy Court Judge Michael Wiles appeared heavily skeptical about an attempt by the Securities and Exchange Commission (SEC) to stop a purchase by Binance.US of assets of defunct crypto lender Voyager Digital at a Thursday court hearing.
The securities regulator said the $1.02 billion deal should be blocked because Voyager’s token could constitute an unregistered security.
“You come here and tell me … that I should stop everybody in their tracks because you might have an issue,” Wiles said, addressing counsel for the SEC. “It's kind of a weird objection.”
Wiles, who is with the Southern District Bankruptcy Court in New York, said he was "absolutely shocked" at the SEC's objection, saying it was asking Voyager to prove a negative with little guidance from the regulator.
“I get the feeling that this objection has been made as a kind of cover, so you can say later that we'll see we raised these issues,” he said. “You haven't really, you have done nothing … I need to know specifics.”
William Uptegrove, representing the SEC, said that creditors had not been sufficiently warned of regulatory risks, but declined to take a definitive position on whether VGX was a security.
Counsel for Voyager told the court that the deal could see creditors achieving 73% recovery, a revision upward thanks to the recently bullish crypto market. Court filings show that 97% of its customers, representing 98% of total claims, had voted in favor of the deal, though it has found less favor with regulators.
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