The US Government Seeks Permanent Suspension of Voyager’s Chapter 11 Plan

On March 24th, the Voyager Unsecured Creditors Committee (Voyager UCC) disclosed on social media that the US government had previously moved to seek a permanent “suspension” of the Chapter 11 plan of Voyager, and said that regardless of whether Voyager promoted the acquisition of Binance.US, it would continue to appeal and seek a “suspension” of the transaction.

Voyager UCC: The local court has postponed the administrative execution of approving the “Binance. US acquisition transaction” until March 28

On March 24th, the Voyager Unsecured Creditors Committee (Voyager UCC) disclosed on social media that the US government had previously moved to seek a permanent “suspension” of the Chapter 11 plan of Voyager, and said that regardless of whether Voyager promoted the acquisition of Binance.US, it would continue to appeal and seek a “suspension” of the transaction.

What is Voyager and Chapter 11?

Voyager Digital is a crypto-asset broker established in 2018. It offers a wide range of trading services for retail and institutional investors. In February 2021, Voyager announced that it had agreed to acquire Binance.US, the US-based subsidiary of global crypto exchange Binance, in a deal worth around $185 million.
Chapter 11 is a reorganization bankruptcy proceeding that allows businesses to restructure debt and obligations without compromising their operations. Typically, it provides a framework under which a debtor can propose a plan of reorganization to keep its business alive and pay creditors over time.

What is the US Government’s Issue with Voyager’s Chapter 11 Plan?

Sources suggest that the US government offered to lend Voyager a $5m loan in 2020 to support the company during the pandemic. The conditions of the agreement were that Voyager must maintain a strict separation from its Canadian parent company and adhere to strict operational rules.
Subsequent to the receipt of the loan, the US government lodged a complaint stating that Voyager had breached the terms of the agreement with the loan, alleging that the parent company had made material contributions to Voyager’s operations, including approving budgets, appointing staff, and signing contracts.
Furthermore, despite the allegations, Voyager had requested that the court allow it to go ahead with the acquisition of Binance.US. The US government opposes this move and seeks a permanent “suspension” of Voyager’s Chapter 11 plan.

How Will the Government’s Request Affect Voyager’s Operations?

Although Voyager has stated that it will continue to pursue the acquisition of Binance.US despite the government’s objection, it is unclear how this will affect the company’s operations moving forward.
If the government succeeds in its request to suspend Voyager’s Chapter 11 plan, it is likely that some investors may lose faith in Voyager’s ability to remain solvent and continue to operate. Additionally, it remains to be seen how this will impact Voyager’s reputation in the broader crypto community and whether the company can find a viable path forward amidst these hurdles.

What Does This Mean for Crypto Investors?

As with any investment, it is crucial to consider the risks associated with investing in a particular asset. In the case of Voyager, investors should be aware of the company’s current legal predicament and the potential outcomes of the government’s request to suspend Voyager’s Chapter 11 plan.
In the broader context, this situation highlights the regulatory scrutiny that crypto-based companies face as the market continues to mature. It is more important than ever for investors to conduct thorough due diligence and have a keen understanding of the regulatory environment in which these companies operate.

Conclusion

The US government’s request to suspend Voyager’s Chapter 11 plan is a significant event that has broader implications for the crypto industry. As the market evolves, regulatory scrutiny is likely to increase; investors must be prepared to navigate these challenges carefully.
Regardless of the outcome of Voyager’s current situation, the core principles of sound investment practices apply. Investors must weigh the risks and rewards of any investment, conduct thorough due diligence, and have a clear understanding of the broader regulatory landscape.

FAQs

Q1. What is the Chapter 11 process?
Chapter 11 is a reorganization bankruptcy proceeding that allows businesses to restructure debt and obligations without compromising their operations.
Q2. What is the US government’s issue with Voyager’s Chapter 11 plan?
The US government alleges that Voyager’s Canadian parent company breached the terms of an agreement in which Voyager received a $5m loan to support the company during the pandemic. Additionally, the government opposes Voyager’s proposed acquisition of Binance.US.
Q3. What does this mean for crypto investors?
Investors should be aware of the risks associated with investing in Voyager, given the company’s legal predicament. Additionally, this situation highlights the growing regulatory scrutiny that crypto-based companies face, making it more important than ever for investors to conduct thorough due diligence before investing.