• The US Securities Exchange Commission (SEC) will not be allowed to fine executives involved in Voyager Digital if it issues bankruptcy tokens.
• This is due to a ruling from US judge Michael Wiles during the third day of hearings on a plan by Voyager to issue a repayment token and sell $1 billion of assets to Binance.US.
• The SEC argued that the repayment token would constitute an unregistered security offering, while Binance.US is operating an unregulated securities exchange.
SEC Not Allowed To Punish Voyager Advisers Over Bankruptcy Token, Says US Judge
Ruling From Judge Michael Wiles
The United States Securities Exchange Commission (SEC) won’t be allowed to fine executives involved in Voyager Digital should it end up issuing bankruptcy tokens to help repay impacted customers, bankruptcy judge Michael Wiles has said.The comments from Wiles came on Mar. 6, the third day of hearings regarding a plan by Voyager to issue a repayment token and sell $1 billion of assets to Binance.US.
The SEC earlier argued that the repayment token would constitute an unregistered security offering, while Binance.US is operating an unregulated securities exchange. In a supplemental objection statement, it also objected to a legal protection which stated that no U.S. agency, including the SEC, will be able to bring “any claim against any Person on account of or relating to the Restructuring Transactions.”Essentially, this means that executives and restructuring advisers involved in Voyager’s bankruptcy would be shielded from lawsuits if they implement the bankruptcy plan, as long as it is court-approved.
Judge Wile’s Response
While the SEC described these provisions as “extraordinary” and “highly improper,” Wiles explained that giving the SEC such authority would “leave a sword hanging over the heads of anybody who’s going to do this transaction,” according to a Mar. 6 Bloomberg report:”How can a bankruptcy case or any court proceeding function with that kind of suggestion?”SEC lawyer Therese Scheuer argued however that the legal protections are so broad that Voyager employees and lawyers would have permission to violate securities laws. After debate, Voyagers lawyers agreed to narrow the scope of legal releases, according to Bloomberg..
Voyager Digital’s Chapter 11 Restructuring Plan
Voyager officially filed for bankruptcy on Jul 5 in an attempt to restructure their firm and “return value” back o over 100000 customers . The court has been considering a restructuring plan since Dec 19 which includes issuing repayment tokens as well as selling 1 billion dollars worth off assets back too binance US