According to a memorandum of support, the $1 billion asset sale agreement between insolvent cryptocurrency broker Voyager Digital and Binance.US has received endorsement from the United States Department of Justice to put the deal on hold until an appeal motion is handled.
The joint motion was submitted on Tuesday in the U.S. Bankruptcy Court for the Southern District of New York by the U.S. trustee William K. Harrington and U.S. attorney for the Southern District of New York Damian Williams, together with other representatives.
Despite several objections from the U.S. Securities and Exchange Commission, Judge Wiles accepted Voyager’s proposed plan to sell its assets to Binance.US in a $1 billion deal, as was revealed last week.
The SEC stated that the deal may entail selling unregistered securities and revealed that Voyager was under investigation for breaking federal securities laws against fraud.
The DOJ expressed its concerns over the execution of the scheme that exempted Voyager and its employees from the consequences of tax and securities law violations in the appeal. Williams and Harrington have now backed the appeal’s move, asking that the transaction be put on hold while legal matters are resolved.
“This Motion seeks (1) a partial stay pending appeal1 of the Exculpation Provision…of the March 8, 2023, Confirmation Order confirming Third Amended Joint Chapter 11 Plan of Voyager Digital Holdings,… if necessary, a stay of the entire Confirmation Order, and (2) in the alternative, if the Court denies the stay pending appeal, a two-week stay for the Government to pursue a stay in the District Court,” the filing stated.
Williams said that the DOJ would probably win the appeal move because the US legislature had not given the court the authority to hear cases involving behavior covered by the government’s regulatory authority.
The lawyer contended that there was no legal justification in the bankruptcy statute for the court to shield insolvent firms from government enforcement and other proceedings.