Bankrupt crypto lender Voyager Digital on Tuesday received its first court approval for a proposed $1 billion sale of its assets.
US bankruptcy judge Michael Wiles admitted in New York Traveller enter into an asset purchase agreement Binance.US and obtain creditors’ votes on the sale, which will not become final until a future court hearing.
Voyager’s attorney, Joshua Sussberg, said during Tuesday’s court hearing that Voyager was responding to concerns raised over the holiday by the US Committee on Foreign Investments in the United States (CFIUS), an interagency body that monitors foreign investment in US -Companies screened for national security risks. He said Voyager intends to address any issues that would cause CFIUS to deny the transaction.
“We are coordinating with Binance and their attorneys to not only handle this investigation, but to voluntarily file a request to move this process forward,” Sussberg said.
CFIUS said in a Dec. 30 court filing that its review “could adversely affect the parties’ ability to complete the transactions, the timing of completion, or any relevant terms.”
The Binance transaction includes a cash payment of US$20 million (around Rs.1.60 billion) and an agreement to transfer Voyager’s customers to the Binance.US crypto exchange, Sussberg said. Customers could then withdraw money for the first time since July.
Voyager estimates that the sale will allow customers to recover 51 percent of the value of their deposits at the time Voyager filed for bankruptcy.
If CFIUS blocks the transaction, Voyager will be forced to pay customers back with the cryptos they have, resulting in a lower payout for Voyager users, Sussberg said.
Washington is increasingly using CFIUS to discourage Chinese investment in the United States.
Binance is owned by Changpeng Zhao, a Chinese-born Canadian citizen, and has no permanent headquarters. The company was the subject of a money laundering investigation by US prosecutors. Based in Palo Alto, California, Binance.US has said its separate American exchange is “completely independent” from the main platform, Binance.
In addition to CFIUS, the proposed sale of Voyager was also opposed by the US Securities Exchange Commission and state securities regulators. Glenn allowed Voyager to proceed despite these objections and said securities regulators may object to final approval of the sale going forward.
Voyager filed for bankruptcy in July, months after major crypto tokens TerraUSD and Luna sent shockwaves through the digital asset industry.
Voyager originally planned to sell its assets to FTX Trading, but that deal imploded when FTX went bankrupt in November amid a spate of customer withdrawals and fraud allegations that led to the arrest of founder Sam Bankman-Fried.
© Thomson Reuters 2023
