The US Government wants to halt the $1 billion deal between Binance.US and Voyager Digital.
The government said the deal should be on hold while key legal objections are ironed out.
Binance looks prime to acquire Voyager Digital’s assets after FTX’s collapse in November.
Government seeks to halt the Voyager-Binance.US deal
The United States government revealed in a filing on Tuesday that it wants the $1 billion deal offered by Binance.US to buy assets of bankrupt crypto lender Voyager to be put on hold until key legal objections are ironed out.
This latest cryptocurrency news comes after an appeal by the U.S. Trustee, a branch of the Department of Justice responsible for bankruptcy cases. The US Trustee has concerns that the deal would ensure that Voyager and its staff would not be held responsible for breaches of tax or securities law.
The filing by U.S. Attorney Damian Williams said;
“The Court cannot tell the Government to speak now or forever hold its peace before Voyager and Binance.US wed. Nothing in the Bankruptcy Code permits courts to exculpate parties from liability to the Government for past and future conduct.”
According to Williams, the approval of the deal should be paused, or at least the parts which limit the US Government’s ability to enforce the law, until appeals are properly addressed in higher courts.
Binance.US looks set to complete Voyager Digital’s acquisition
The appeal comes a week after New York bankruptcy judge Michael Wiles approved the deal. The judge showed considerable skepticism of arguments from the Securities and Exchange Commission, which argued that Voyager’s VGX token might be an unregistered security.
Last month, Voyager Digital sold some of its assets through the US-based cryptocurrency exchange Coinbase.
The company received roughly $100 million in the USD Coin (USDC) stablecoin for sales of several tokens, including Shiba Inu, Ethereum and the native Voyager Token.
Binance.US took the prime position to acquire Voyager Digital’s assets after the collapse of FTX. FTX previously agreed to acquire Voyager Digital before the collapse of the cryptocurrency exchange.
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On Tuesday, the US government requested that the judge presiding over the Voyager-Binance deal, which is set to give the cryptocurrency firm a controlling stake in the popular cryptocurrency exchange, halt the transaction.
Voyager Digital Ltd., a publicly traded cryptocurrency brokerage, and Binance.US, the US branch of one of the world’s largest cryptocurrency exchanges, announced the transaction in late October. The deal was seen as a crucial step in helping Binance.US become a key player in the crypto market.
However, the US Commodity Futures Trading Commission (CFTC) filed a complaint against Binance.US, alleging that the exchange had engaged in “fraudulent, manipulative, and deceptive activities” by making misleading statements to US customers.
In addition, the Department of Justice (DOJ) has requested that the court put a halt to the merger, citing potential national security concerns that could arise from the increased identity validation requirements of the merger. The Department argued that these additional requirements could create further “dangerous avenues of exploitation by criminals, including terrorist networks.”
The two sides are now set to go to court on December 29 to present their case. If the Voyager-Binance deal is indeed aborted, it could have major repercussions for the cryptocurrency industry in the US.
In the meantime, the Justice Department’s action has once again highlighted the importance of stringent anti-fraud measures in the cryptocurrency space. The DOJ appears to be sending a clear message that it will not hesitate to act when cryptocurrency exchanges fail to adhere to the highest standards of customer protection.