Court Filing

Voyager’s $1B sale to Binance.US put on hold by US court

A federal judge has temporarily halted a proposed deal between Voyager and Binance.US in order to give the government more time to pursue appeals that challenge the deal.

Voyager Digital’s $1 billion sale to Binance.US has been temporarily halted by a federal judge after a request by the United States government for an emergency stay.

The request for an emergency stay was granted by Judge Jennifer Rearden of the U.S. District Court in New York on March 27, meaning the potential deal between Voyager and Binance.US will now need to wait until at least a decision is made on the Department of Justice’s appeal against the bankruptcy plan.

*District Court Judge Jennifer Rearden granted approval of the U.S. DOJ’s emergency motion. Source:* *Court Listener*

The DOJ filed the emergency application for a stay on March 17. This motion was promptly challenged by Voyager Digital and the Official Committee of Unsecured Creditors on March 20 and responded to again by the DOJ in a final “reply” motion on March 21.

In its latest order, Judge Rearden summarized:

“Upon consideration of all parties’ written submissions, as well as the conferences and oral argument held in this matter, the Government’s emergency motion is hereby GRANTED.”

The federal judge will soon release an opinion explaining the decision in more depth.

The cryptocurrency trading firm filed for Chapter 11 bankruptcy on July 5 and has been proactive in coordinating a plan to redistribute funds ever since.

The Binance.US acquisition of Voyager was granted by Judge Wiles on March 7. Part of that approval involved the issuance of bankruptcy tokens to impacted Voyager customers.

However, U.S. regulators have made multiple attempts have been made to halt the deal.

In addition to the DOJ, the U.S. Securities Exchange Commission argued in a March 15 motion that Voyager’s bankruptcy plan would give rise to fraud, theft or tax avoidance. However, this claim was later denied by Judge Michael Wiles.

The Voyager Official Committee of Unsecured Creditors explained in a March 27 Twitter post that they “will continue to aggressively oppose the Government’s efforts.”

3/ The Committee is still analyzing the situation and awaiting the district court's forthcoming written opinion. We will continue to aggressively oppose the Government’s efforts and will provide further updates as they become available.

— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) March 27, 2023

Over 97% of 61,300 Voyager account holders favor the restructuring plan, according to a poll released in a Feb 28 court filing. The plan is expected to pay out 73% of what Voyager customers are owed.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Voyager’s $1B sale to Binance.US put on hold by US court

A federal judge has temporarily halted a proposed deal between Voyager and Binance.US in order to give the government more time to pursue appeals that challenge the deal.

Voyager Digital’s $1 billion sale to Binance.US has been temporarily halted by a federal judge after a request by the United States government for an emergency stay.

In its latest order, Judge Rearden summarized:

“Upon consideration of all parties’ written submissions, as well as the conferences and oral argument held in this matter, the Government’s emergency motion is hereby GRANTED.”

The federal judge will soon release an opinion explaining the decision in more depth.

The cryptocurrency trading firm filed for Chapter 11 bankruptcy on July 5 and has been proactive in coordinating a plan to redistribute funds ever since.

The Binance.US acquisition of Voyager was granted by Judge Wiles on March 7. Part of that approval involved the issuance of bankruptcy tokens to impacted Voyager customers.

However, U.S. regulators have made multiple attempts have been made to halt the deal.

The Voyager Official Committee of Unsecured Creditors said in a March 27 tweet that they “will continue to aggressively oppose the Government’s efforts.”

3/ The Committee is still analyzing the situation and awaiting the district court’s forthcoming written opinion. We will continue to aggressively oppose the Government’s efforts and will provide further updates as they become available.

— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) March 27, 2023

Over 97% of 61,300 Voyager account holders favor the restructuring plan, according to a poll released in a Feb 28 court filing. The plan is expected to pay out 73% of what Voyager customers are owed.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

SBF’s inner circle received $3.2B, mainly from Alameda: Court filings

Billions worth of loans and payments flowed from FTX entities to Sam Bankman-Fried and five other former executives of FTX and Alameda Research.

FTX and Alameda Research’s former top brass received $3.2 billion in payments and loans from FTX-linked entities, according to the FTX administrators handling the firm’s restructuring.

FTX, now helmed by CEO John Ray III, has been tracking missing funds from the exchange since its collapse. It estimates a total of $8.9 billion is missing.

According to a March 15 statement from FTX Debtors, financial statements it filed in the Delaware Bankruptcy Court point to billions of dollars worth of loans and payments that allegedly flowed to Sam Bankman-Fried and high-ranking executives, which came mainly from trading house Alameda Research.

Sharing the FTX Debtors’ press release just issued: https://t.co/r7PlneGSXF

— FTX (@FTX_Official) March 16, 2023

Bankman-Fried, however, reportedly received the lion’s share of the funds at $2.2 billion.

Others named in the list include former FTX director Nishad Singh, FTX co-founder Gary Wang, and former Alameda Research CEO Caroline Ellison, among others.

It provided a rough breakdown of the payments made to the FTX executives, as follows:

$2.2 billion to Sam Bankman-Fried
$587 million to Nishad Singh — former FTX director of engineering
$246 million to Zixiao “Gary” Wang — FTX co-founder
$87 million to Ryan Salame — former co-CEO of FTX Digital Markets (FTX’s Bahamian entity)
$25 million to John Samuel Trabucco — former co-CEO of Alameda
$6 million to Caroline Ellison — former CEO of Alameda

The amounts exclude over $240 million used for various purchases, such as luxury properties in the Bahamas, donations to political and charitable causes and “substantial transfers” to non-FTX subsidiaries, it noted.

FTX’s management said it is currently investigating its rights to pursue potential action against the recipients, along with their subsequent transferees, and that ongoing efforts are “expected to result in the further identification of assets, liabilities and transfers.”

It added it’s looking at ways to claw back the funds from the former executives but said the “amount and timing of eventual monetary recoveries cannot be predicted at this time.”

Bankman-Fried is facing 12 charges relating to conspiracy, wire and securities fraud in connection to the alleged mishandling of funds at FTX and its affiliates. He previously plead not guilty to eight similar original charges.

Ellison, Wang and Singh have pleaded guilty to charges similar to those brought against Bankman-Fried and are cooperating with investigations spearheaded by federal prosecutors.

The first known instance of an executive from FTX or Alameda assisting authorities came as Salame blew the whistle to Bahamian regulators of the potential fraud being perpetrated at FTX, which led them to shutter the exchange just two days later, on Nov. 11.

Ripple CEO: XRP lawsuit resolved by June, SEC conduct ‘embarrassing’

Ripple CEO Brad Garlinghouse said the firm’s XRP lawsuit could come to an end within “single-digit months.”

Ripple CEO Brad Garlinghouse expects the firm’s long-running dispute with the U.S. Securities Exchange Commission (SEC) will be finalized within “single-digit months” and remains confident in securing a favorable outcome.

Speaking to CNBC on Jan. 18 at the World Economic Forum in Davos, Switzerland, Garlinghouse said the that verdict could come as soon as June now that both parties have “fully filled and fully briefed” their arguments before the U.S. District Court:

“We expect a decision from a judge certainly in 2023. You don’t really have control over when a judge makes their decisions. But I’m optimistic that sometime in the coming single digit months we’ll have closure there.”

While Garlinghouse and investors believe that the facts, law and the court will ultimately side with Ripple, the Ripple CEO also took the opportunity to ridicule the SEC’s “embarrassing” behavior displayed throughout the lawsuit, noting:

“The SEC’s behavior in some of it has been embarrassing as a U.S. citizen. Just some of the things that have been happening, like you’ve got to be kidding.”

Garlinghouse also argued the firm was betrayed by the regulator, as it filed the lawsuit despite their efforts to meet with them on three separate occasions seeking regulatory clarity:

“Not once did they say to me we think XRP may be a security. So to later go back and say hey the whole time we thought XRP was a security we just didn’t tell you… that doesn’t feel like a genuine partnership between public sector and private sector.”

While noting that the outcome of the case also has huge implications for the cryptocurrency industry, Garlinghouse reiterated that Ripple would only settle if it was made clear that XRP (XRP) is not a security.

However, “the SEC and Gary Gensler has very outwardly said he views almost all crypto as a security,” Garlinghouse said, “so that leaves very little space in the Venn diagram for settlement.”

*Garlinghouse speaking with CNBC at the World Economic Forum in Davos, Switzerland. Source:* *CNBC.*

Garlinghouse added that the SEC should take note of some of the more crypto-friendly countries that are piecing together more “positive” regulation that doesn’t stifle innovation.

Among the countries that he spoke highly of were the United Arab Emirates, Japan, Singapore, Switzerland and the U.K.

The lawsuit was initiated by the SEC in December 2020, claiming that Ripple illegally sold its XRP token as an unregistered security.

Ripple has long disputed the claim, arguing that it doesn’t constitute an investment contract under the Howey test.

Should the two sides fail to settle, the New York-based district court will either make a standalone ruling or put the matter before a jury in a trial.

FTX customers names will remain sealed for now, rules judge

The decision comes after a Jan. 8 filing by FTX’s lawyers, who argued that public disclosure could create an undue risk of identity theft or unlawful injury to FTX creditors.

The names of up to nine million FTX customers are set to remain confidential for at least three more months following the latest ruling in FTX bankruptcy proceedings.

The decision was reportedly made by Judge John Dorsey in the Delaware-based bankruptcy court on Jan. 11 in response to a 168-page filing by FTX on Jan. 8, which requested the court to withhold confidential customer information.

Judge Dorsey said that he remains “reluctant at this point” to disclose the confidential information, as it may put creditors “at risk,” despite increased pressure from several media outlets:

“We’re talking about individuals here who are not present – individuals who may be at risk if their name and information is disclosed.”

Days earlier, FTX lawyers argued “that disclosure of the information would create an undue risk of identity theft or unlawful injury to the individual or the individual’s property” and that the court should use its “broad discretion” under the U.S. Bankruptcy Code to protect those affected by FTX’s collapse.

In late December, a group of non-U.S. FTX customers also pushed the Delaware bankruptcy court to keep customer information private, arguing in a Dec. 28 joinder filing that public disclosure would cause “irreparable harm.”

Judge Dorsey’s decision does however run contrary to most bankruptcy proceedings where creditor information is disclosed — which is what happened in cryptocurrency lender Celsius’ bankruptcy proceedings in October.

The Delaware-based bankruptcy court hasn’t been as kind to FTX equity holders, having released a Jan. 9 document that disclosed the investors expected to be wiped out and the number of shares they held with FTX.

Among those included NFL legend and former FTX brand ambassador Tom Brady, his ex-wife Gisele Bündchen, tech entrepreneur Peter Thiel and Shark Tank investor Kevin O’Leary.

It appears that progress is being made though, with FTX reported to have already recovered $5 billion in cash and cryptocurrency, FTX attorney Andy Dietderich said in a Jan. 11 statement.

According to early bankruptcy filings in November, more than 1 million creditors were speculated to be involved, with $3 billion being owed to the 50 largest creditors alone.