Voyager

Bitcoin price holds its ground in the wake of CFTC case against Binance

BTC options and derivatives markets seem unfazed by the CFTC’s recent action against Binance, but is that a good or a bad sign?

The price of Bitcoin (BTC) fell 3.6% to $26,900 after Binance and CEO Changpeng “CZ” Zhao were sued by the United States Commodity Futures Trading Commission on March 27. To date, Binance has been investigated by the CFTC, Securities and Exchange Commission, the Internal Revenue Service and federal prosecutors.

The Bitcoin price correction may have been limited due to Silicon Valley bank’s successful asset sale to First Citizens BancShares at a $16.5 billion discount, which received an extraordinary credit line from the Federal Deposit Insurance Corporation to compensate for potential future losses.

Oil prices also increased by 5% on March 27 after Russian President Vladimir Putin escalated geopolitical tensions in Europe. As reported by Investing.com, Russia plans to station tactical nuclear weapons in neighboring Belarus, in a move designed to intimidate opposing countries over their support for Ukraine.

Further tension from the crypto industry arose after a U.S. Federal Judge decided to temporarily halt the proposed sale of Voyager Digital to Binance.US. on March 27. Judge Jennifer Rearden of the U.S. District Court in New York granted the request for an emergency stay.

Let’s examine Bitcoin derivatives metrics to determine the current market position of professional traders.

Bitcoin futures show no impact from the CFTC–Binance case

Bitcoin quarterly futures are popular among whales and arbitrage desks, which typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement for a longer period.

As a result, futures contracts on healthy markets should trade at a 5%–10% annualized premium — a situation known as contango, which is not unique to crypto markets.

Bitcoin 2-month futures annualized premium. Source: Laevitas

The Binance news had no effect on the Bitcoin futures premium, despite the fact that the exchange holds 33% of the $11.2 billion open interest. The two-month contract premium is 3.5%, which is less than the neutral 5% threshold. Had there been some panic selling using leverage futures contracts, the indicator would have quickly moved to zero or even negative.

The absence of demand for leverage longs does not necessarily imply a price decline. As a result, traders should investigate Bitcoin’s options markets to learn how whales and market makers value the likelihood of future price movements.

Bitcoin options traders remain slightly optimistic

The 25% delta skew is a telling sign showing when market makers and arbitrage desks are overcharging for upside or downside protection. In bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 8%. On the other hand, bullish markets tend to drive the skew metric below -8%, meaning the bearish put options are in less demand.

Bitcoin 60-day options 25% delta skew: Source: Laevitas

The 25% skew ratio stands at -5, indicating that the protective put options are trading at a slight discount, confirming the Binance news’ irrelevance. More importantly, the CFTC action had no effect on the 25% skew, so whales and market markets are not pricing in any meaningful market structure change.

Related: Bitcoin price will hit this key level before $30K, survey says

What doesn’t kill you makes you stronger

The fact that derivatives indicators were barely impacted could be the “remote misses” effect, as analysis and pundits evaluate the odds of Binance and CZ getting anything more than a million-dollar fine and some term of conduct adjustment.

This type of psychological distortion was first observed in London during World War II when survivors who did not face imminent losses became even more confident and less likely to feel traumatized.

It appears unlikely that the market will price in higher odds of extreme volatility until those whales and arbitrage desks face more than a 3.5% price correction.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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.

Related: US officials appeal protections for Voyager execs in Binance.US sale

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.”

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.

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.

Related: US officials appeal protections for Voyager execs in Binance.US sale

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 said in a March 27 tweet that they “will continue to aggressively oppose the Government’s efforts.”

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

SEC snubbed as Voyager wins court approval for sale to Binance.US

The ruling allows the crypto lender a path out of its bankruptcy, but it still has to undertake some due diligence with Binance US before the sale is final.

Bankrupt cryptocurrency lender Voyager Digital has won court approval to sell over $1 billion of its assets to Binance.US.

The approval was granted by United States Bankruptcy Judge Michael Wiles on Mar. 7, which came after four days of arguments presented by Voyager and the United States Securities Exchange Commission.

Wiles said he would give the trading platform permission to close the Binance.US sale and issue repayment tokens to impacted Voyager customers, which would give them back approximately 73% of what they’re owed.

Wiles rejected a series of arguments by the SEC that the redistribution of the funds from Voyager to Binance.US would violate U.S. securities laws, according to a Mar. 7 report from Bloomberg:

“I cannot put the entire case into indeterminate deep freeze while regulators figure out whether they believe there are problems with the transaction and plan.”

Peter M. Aronoff, a lawyer with the Department of Justice, said at the hearing it’s considering appealing Wiles’ decision.

The judge’s decision comes just over a week after 97% of 61,300 Voyager account holders were found to favor the current Binance.US restructuring plan, according to a Feb. 28 filing.

The approval comes a day after Judge Wiles stated 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 take a few weeks to decide whether to complete the Binance.US sale or liquidate on its own and turn over the proceeds to Voyager account holders.

This will depend on how troubling Voyager views the ongoing investigations that Binance.US is entangled in with federal authorities.

Related: SEC objection to Voyager-Binance.US deal questioned by US judge

Voyager’s lead investment banker, Brian Tichenor, said in a March 3 court hearing if the approved restructuring plan is executed, customers would receive about $100 million more than if Voyager liquidated on its own

Customer payouts will also be influenced by Voyager’s bankruptcy court dispute with FTX’s sister company Alameda Research, which is demanding that Voyager hands over what was originally lent out. Voyager has agreed to reserve $445 million in case it loses that dispute.

The price of Voyager’s token, VGX, shot up 32.9% from $0.37 to $0.50 in the four hours of the news before cooling off to $0.46 at the time of writing, according to CoinGecko data.

Price change of Voyager’s token, VGX over the last 24 hours. Source: CoinGecko.

SEC objection to Voyager-Binance.US deal questioned by US judge

A United States judge scolded the Securities and Exchange Commission over its vague objection to Voyager’s restructuring deal and asked for specifics on its concerns.

The bankruptcy judge on Voyager Digital’s case has reportedly scolded the United States securities regulator over its ambiguous reasoning for objecting to the crypto lending firm’s proposed sale to Binance.US.

At a March 2 hearing in a New York court, U.S. bankruptcy judge Michael Wiles said the Securities and Exchange Commission had basically asked to “stop everybody in their tracks” without explaining how to address concerns it had over the deal, according to a Reuters report.

The court was considering a restructuring plan announced on Dec. 19 to bring Voyager out of Chapter 11 bankruptcy that would see crypto exchange Binance.US acquire its assets for $1.02 billion — an option Voyager said at the time represented the “highest and best bid for its assets.”

The SEC, however, filed an objection to the sale on Feb. 22, claiming aspects of the restructuring plan could breach securities laws, namely the crypto transactions that will need to happen to rebalance funds to redistribute to Voyager account holders.

In court, SEC attorney William Uptegrove offered a reserved answer to Judge Wiles when asked if the regulator believes the plan violated the law, saying:

“We can’t take a position at this point. The SEC is a deliberative body, and its process is a nonpublic one by federal law.”

Wiles hit back, saying “deliberative is one thing, but what have you done?” and added, “if there are reasons to be concerned here, I need to hear specifics.”

The sale requires court approval, along with the go-ahead from the SEC and the Committee on Foreign Investment in the United States (CFIUS), which is probing the deal to review if it will entail a foreign investment and raise national security concerns.

Judge Wiles is set to hear continued arguments on the bankruptcy plan on March 3.

Related: FTC announces investigation into Voyager’s ‘deceptive and unfair marketing’ of crypto

The proposed Binance.US plan would transfer Voyager customers to the crypto exchange. Those customers would then be able to withdraw their funds for the first time since the platform filed for bankruptcy last July.

Customers would reportedly recover over 70% of their deposited value as of the time of the bankruptcy. In a poll of 61,300 account holders with claims against the crypto lender, the plan was favored by 97% of Voyager’s customers.

FTC announces investigation into Voyager’s ‘deceptive and unfair marketing’ of crypto

In an objection to Voyager’s proposed restructuring plan, the commission argued some of the involved parties should not be exempt from certain financial claims in the future.

The United States Federal Trade Commission said it had started an investigation of crypto lending firm Voyager Digital parallel to the company’s bankruptcy proceedings.

In a Feb. 22 filing in U.S. Bankruptcy Court for the Southern District of New York, the FTC said it was investigating Voyager and its employees “for their deceptive and unfair marketing of cryptocurrency to the public.” The announcement followed Bankruptcy Judge Michael Wiles initially approving of a plan in which Voyager debtors would sell the firm’s assets to Binance.US for more than $1 billion.

According to the FTC filing — an objection to the debtors’ plan — the commission argued some of the parties involved in Voyager’s bankruptcy proceedings should not be exempt from certain financial claims, “including debts for ‘false representation,’ and ‘false pretenses’”:

“By not excluding, inter alia, false pretenses and false representations, the release can be read to interfere with causes of action by a governmental unit like the FTC. This is impermissible […] the FTC respectfully requests the Court deny confirmation of the Debtors’ Proposed Plan.”

Voyager filed for Chapter 11 bankruptcy in the United States in July 2022 prior to similar filings from Celsius Network, FTX and BlockFi. One of the proposed plans for restructuring the firm would have Binance.US acquire Voyager’s assets, but the U.S. Securities and Exchange Commission has objected to the move, citing a lack of “necessary information.”

Related: Voyager creditors serve SBF a subpoena to appear in court for a ‘remote deposition’

Bankruptcy proceedings for Celsius and FTX are also ongoing, with respective chief executive officers Alex Mashinsky and Sam Bankman-Fried facing scrutiny from U.S. authorities for their alleged actions prior to the companies filing for Chapter 11. Under Celsius’ proposed restructuring plan, more than 85% of users were expected to recover roughly 70% of their funds.

Voyager victim calls for trustee to seize control of the estate

The 120-page motion came from a creditor who asked for the appointment of a Chapter 11 trustee, citing alleged fraud and incompetence at Voyager.

A Voyager creditor and finance lawyer wants to see a Chapter 11 trustee appointed in crypto brokerage Voyager Digital’s bankruptcy trial, which would see Voyager lose control of its estate.

In a Feb. 1 motion, Voyager creditor Michelle DiVita accused Voyager of having a “history of financial statement inaccuracies and public misrepresentations that were known, or reasonably discoverable, at the beginning of the bankruptcy proceeding.“

Due to this pre-bankruptcy conduct, DiVita believes that an examiner or trustee should have been requested and is now doing so herself.

The filing alleges that Voyager “concealed the true nature of its lending activities by publishing financial reports that materially understated its loan positions by more than $1 billion.”

Shigo Lavine, a former director and chief investment officer for Voyager, highlighted some of the key accusations made in the filing in a lengthy Feb. 1 Twitter thread.

For example, Voyager allegedly underreported a loan to crypto hedge fund Three Arrows Capital by $609 million and undervalued Bitcoin (BTC) in its financial reports by 546% to downplay the size of its loans.

According to the filing, crypto exchange Coinbase also caught wind of Voyager’s “financial reporting inconsistencies” and had reportedly backed out of a potential deal to acquire the assets of Voyager after finding “the financials don’t add up.”

The bankruptcy proceedings already involve a United States rustee, who is required to bring a motion to appoint a Chapter 11 trustee when there are “reasonable grounds to suspect” that the debtor “participated in actual fraud, dishonesty or criminal conduct.”

While the U.S. trustee appoints a creditors committee and reviews applications for the recompensation of professionals amongst other duties, they may also hire a bankruptcy trustee to manage the debtor’s affairs if the debtors are not allowed to do so themselves.

Cointelegraph has contacted Voyager for a response to the allegations and the motion but did not receive an immediate response.

Related: Voyager tells court Binance acquisition plan is ‘sound business judgment,’ urgently needed

In other news, both Voyager and its creditors have pushed back at an attempt by bankrupt trading firm Alameda Research to claw back $446 million in loan repayments.

After commencing Chapter 11 proceedings on July 5, Voyager demanded the repayment of all its outstanding loans to Alameda which was repaid in full.

However, Alameda sought to recover the funds in a Jan. 30 court filing, arguing that because they repaid the loans within 90 days of filing for Chapter 11 bankruptcy, they could “claw back” these funds for the benefit of Alameda creditors.

Voyager says that its creditors have suffered “substantial harm” due to Alameda making a bid for Voyager’s assets that it could not honor, costing them over $100 million. Voyager argues that this makes Alameda’s claim subordinate to those of its other creditors.

Voyager and Binance.​US deal given initial nod amid national security probe

The deal has received initial approval from the bankruptcy judge but will require the approval of creditors and final court approval.

Bankrupt crypto lender Voyager Digital has received initial court approval for its proposal to sell its assets to Binance.US for $1.02 billion.

The approval comes amid a national security probe concerning Binance.US that Voyager is seeking to speed up.

On Jan. 10, Judge Michael Wiles of the United States Bankruptcy Court for the Southern District of New York allowed Voyager to enter into the asset purchase agreement and seek creditor approval, but the sale will not become final until a future court hearing, according to a Jan. 11 Reuters report.

It comes as Voyager wants to expedite a review of its proposal to sell assets to Binance.US, which could result in the deal being blocked or delayed.

Voyager’ attorney Joshua Sussberg noted during the court hearing that Voyager has been responding to questions from the Committee on Foreign Investment in the United States (CFIUS) and will address any concerns that CFIUS has which could see it oppose the transaction.

“We are coordinating with Binance and their attorneys to not only deal with that inquiry, but to voluntarily submit an application to move this process along,” Sussberg said.

CFIUS is an inter-agency body that reviews foreign investments or acquisitions of U.S. companies for national security concerns.

If it determines that national security concerns regarding the deal are justified CFIUS can block or unwind the transaction or tell involved parties to alter the deal to mitigate concerns.

Cast your vote now!

CFIUS filed a court notice on Dec. 30 indicating “one or more transactions contemplated” by Voyager could be subject to a review, resulting in possible blocks or delays.

Binance’s global entity is reportedly being probed by the U.S. attorney’s office over money laundering allegations, but its CEO, Changpeng “CZ” Zhao, has stated that Binance.US is a “fully independent entity” headquartered in California.

Zhao is a Chinese-born Canadian citizen and CFIUS is authorized to review any transactions that could result in foreign control of a U.S. business or thaaffords a foreign person an equity interest.

Related: Mark Cuban to face questioning under oath over promotion of Voyager

The Voyager Official Committee of Unsecured Creditors — a body representing creditors with no security interests in Voyager — supported the transaction in its current form, noting the deal would result in greater recoveries for creditors than if Voyager liquidated its holdings itself — which is what would occur if CFIUS blocks the transaction.

Previously, objections to the acquisition proposal from Alameda Research, the Securities and Exchange Commission, four U.S. states and the U.S. trustee were rebutted by the bankrupt lender on Jan. 8.

Voyager claimed that the transaction is in the best interest of its creditors and the objections “fail to put forward any factual or legal support” for its arguments.

Voyager announced on Dec. 19 that it had agreed to Binance.US’s bid to acquire its assets for $1.022 billion, after a $1.4 billion deal with FTX.US fell through following the bankruptcy of the crypto exchange.

SEC files objection to Binance.US’s plans to acquire Voyager Digital

The SEC wants to see more information included in the $1.022 billion deal between Binance’s U.S. arm and Voyager Digital before it agrees to the acquisition.

The United States Securities and Exchange Commission (SEC) has filed a “limited objection” to crypto exchange Binance.US’s proposed $1 billion takeover of bankrupt crypto lender Voyager Digital, citing a lack of “necessary information.”

The limited objection was filed on Jan. 4, with the SEC pointing to a lack of detail regarding Binance.US’s ability to fund the acquisition, what Binance.US’s operations would look like following the deal, and how customer assets will be secured during and after the transaction.

A limited objection is similar to a normal objection but only applies to a specific part of the proceedings.

Additionally, the regulator also wants Voyager to provide more detail on what would happen should the transaction not be consummated by April 18.

In its filing, the SEC said it already communicated its concerns with Voyager and the lender intends to file a revised disclosure statement prior to a hearing on the matter.

Some commentators interpreted the objection as the SEC suggesting Binance.US would not be able to afford the acquisition without “some untoward dealing” such as receiving funds from Binance’s global entity.

While Binance CEO Changpeng Zhao (CZ) has publicly stated that Binance.US was a “fully independent entity,” an Oct. 17 Reuters report alleged that the U.S. entity acts more like a “de facto subsidiary” that was created to “insulate Binance from U.S. regulators.”

In response, CZ argued in an Oct. 17 blog post that Binance was committed to complying with regulators, that the author of the article was reporting in a biased manner and had used a presentation provided by an external consultant that was never implemented.

Related: ‘Binance is the crypto market:’ Arcane crowns the exchange 2022’s winner

Voyager announced on Dec. 19 that it had agreed to Binance.US’s bid to acquire its assets, in a deal worth $1.022 billion in total.

The lender noted in a press release that the bid was the “highest and best bid for its assets,” which would maximize the value returned to customers and creditors “on an expedited timeframe.”

Voyager announced on Sept. 27 that FTX.US had won the auction for its assets with an offer of $1.4 billion, which would have seen customers recover 72% of their frozen crypto, a deal that has since fallen through.

INX submits bid for Voyager Digital’s assets

FTX US won a $1.4-billion bid to purchase Voyager’s assets in September, but with the firm filing for bankruptcy, the funds were once again up for grabs.

Trading platform INX has submitted a bid for an undisclosed amount to purchase the assets of crypto brokerage firm Voyager Digital.

In a Nov. 30 announcement, INX said it had sent a non-binding letter of intent for Voyager’s assets following the platform filing for bankruptcy in July. According to INX CEO Shy Datika, the bid was aimed at providing “credibility, technology, and unique regulatory positioning” for Voyager users seeking stability in a volatile market.

Voyager’s original bankruptcy filing from the Southern District Court of New York suggested the firm could owe between $1 billion to $10 billion to more than 100,000 creditors amid a bear market and exposure to Three Arrows Capital. In September, FTX US won a $1.4-billion bid to purchase Voyager’s assets, but with FTX Group itself filing for bankruptcy in November, the funds were once again up for grabs.

Related: Voyager Digital won’t sue its executives for incompetence, will claim insurance on them

Binance has reportedly been considering a bid for Voyager’s assets, while crypto exchange CrossTower was one of the firms that made an offer prior to FTX’s downfall. Cointelegraph reported on Nov. 13 that CrossTower had been working on a revised bid following FTX Group’s bankruptcy filing. INX was not part of the bidding process in September.

Cointelegraph reached out to INX for comment, but did not receive a response at the time of publication.