If Voyager Digital decides to issue bankruptcy tokens to assist reimburse harmed clients, the Securities and Exchange Commission (SEC) will not be permitted to impose fines on officials engaged in the company, according to bankruptcy judge Michael Wiles.
On March 6, the third day of hearings addressing Voyager’s proposal to create a repayment token and sell $1 billion of assets to Binance.US, Wiles made his remarks.
The SEC had previously contended that since Binance.US runs an unlicensed securities exchange, the payback token would be an unregistered security offering.
It objected to a legal safeguard that claimed no U.S. agency, including the SEC, would be allowed to initiate “any lawsuit against any Person on account of or pertaining to the Restructuring Transactions.” in a supplementary objection statement.
In essence, this implies that as long as the bankruptcy plan is accepted by the court, executives and restructuring consultants participating in Voyager’s bankruptcy would be immune from legal action if they follow the plan.
According to a Mar. 6 Bloomberg report, Wiles stated that giving the SEC such authority would “leave a sword hanging over the heads of anybody who’s going to do this transaction,” adding: “How can a bankruptcy case or any court proceeding function with that kind of suggestion?” The SEC referred to these provisions as “extraordinary” and “highly improper.”
Therese Scheuer, an attorney with the SEC, said that since the legal safeguards are so extensive, Voyager workers and attorneys would be free to break securities laws. After discussion, the Voyagers’ legal counsel decided to limit the extent of legal disclosures, according to Bloomberg. On July 5, the trading platform formally declared bankruptcy in an effort to reorganize the business and “restore value” to its more than 100,000 clients.
A reorganization proposal to help Voyager exit Chapter 11 bankruptcy has been under consideration by the court and was initially reported on December 19.
The proposal called for the cryptocurrency exchange Binance.US to buy its assets for $1.02 billion, which Voyager said was the “highest and best offer for its assets” at the time.
On February 22, the SEC objected to the sale, arguing that several elements of the reorganization plan would violate securities rules. At a court hearing on March 2, the regulator received criticism for its vague justification for the objection. According to a court document on February 28, 61,300 Voyager account holders were polled, and 97% of them supported the present Policy.
American reorganization strategy.