CRYPTO-BANKRUPTCY UPDATE: District Court Stays Sale of Voyager Accounts to Binance.US Pending Appeal
By: Michael L. Moskowitz, Esq. & Melissa A. Guseynov, Esq.
On March 13, 2023, we reported on Bankruptcy Judge Michael E. Wiles’ controversial decision to approve a chapter 11 plan authorizing Voyager Digital Holdings Inc. to sell its customer accounts to Binance.US over numerous objections filed by state and federal regulators and investors. After Judge Wiles issued his opinion, the federal government and the U.S. Trustee's office (“Appellants”), both appealed the decision to the District Court.
On Monday, March 27, 2023, District Court Judge Jennifer H. Rearden granted Appellants’ emergency application for a stay pending appeal of the bankruptcy court’s order. See Case No. 1:23-cv-02171 (S.D.N.Y. Mar. 27, 2023). Judge Rearden stated that an opinion setting forth the reasons for the ruling will be filed in the near term.
In the interim, Bloomberg is reporting that Binance is being investigated by the Internal Revenue Service and the Department of Justice. According to media sources, officials who handle money laundering and tax offenses are interested in Binance’s business. Binance is the largest cryptocurrency exchange in the world. These investigations may delay and, ultimately, cripple Voyager’s reorganization plan.
Falcon Rappaport & Berkman will continue to follow the appeal and provide updates to its clients and colleagues as events unfold.
DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.