SEC not allowed to punish Voyager advisers over bankruptcy token, says US judge

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The U.S. Securities and Exchange Commission (SEC) cannot fine executives involved in Voyager Digital if it ends up issuing bankruptcy tokens to help repay affected customers, says bankruptcy Judge Michael Wiles said.

Comments from Wiles came on March 6, the third day of hearings on Voyager’s plans to issue payback tokens and sell $1 billion in assets to Binance.US.

The SEC previously argued that while Binance.US operates an unregulated stock exchange, the repayment token constitutes an unregistered securities offering.

In a supplementary opposition, it also objected U.S. agencies, including the SEC, said they could not bring “any claim against any person by reason of or in connection with a restructuring transaction,” to legal protection.

Essentially, this means that if the executives and restructuring advisors involved in Voyager’s bankruptcy execute the bankruptcy plan, so long as it is approved by the court, it will be protected from lawsuits.

Although the SEC described these provisions as “abnormal” and “grossly inappropriate,” Wiles said granting the SEC such powers “would put a heavy burden on the head of anyone trying to make this transaction.” I will stab you with a sword,” he explained. according to A Bloomberg report dated March 6 stated:

“How would bankruptcy cases and court proceedings work with such a proposal?”

However, SEC attorney Therese Scheuer argued that the legal protections are so broad that Voyager employees and attorneys are allowed to violate securities laws. According to Bloomberg, Voyager’s lawyers agreed to narrow the scope of the legal release after discussion.

Related: Voyager victims call on trustees to take control of property

The trading platform formally filed for bankruptcy on July 5 in order to reorganize the company and “give value back” to its over 100,000 customers.

The court is reviewing a restructuring plan, first announced Dec. 19, to take Voyager out of Chapter 11 bankruptcy.

Under the plan, cryptocurrency exchange Binance.US will acquire the assets for $1.02 billion. This was what Voyager said at the time was the option that represented “the highest and best bid for the property.”

The SEC opposed the Feb. 22 sale, arguing that aspects of the restructuring plan could violate securities laws. The regulator was then criticized at a court hearing on March 2 for vague grounds for objection.

A court filing dated February 28 found that 97% of the 61,300 Voyager account holders who took part in the vote were in favor of Binance.US’ current restructuring plan.