A lawsuit leveled by the CFTC (Commodity Futures Trading Commission) against Binance on Monday had a significant effect on the market as cryptocurrencies like BTC and ETH dropped. However, legal experts have claimed it won’t substantially impact the ongoing Voyager bankruptcy case.
CFTC accused the most popular crypto exchange, Binance, of ignoring derivatives trading policies to allow its clients in the United States to trade derivatives like swaps or futures illegally.
While Binance US is not mentioned as an accused in the lawsuit, CFTC references the entity several times. Founded in 2019, Binance US is an exchange meant to serve American customers. Binance has constantly insisted that its American subsidiary operates independently, a statement that authorities have disputed multiple times.
Nevertheless, Binance US managed to seal a purchase deal with Voyager in February. Michael Wiles, the Judge overseeing the bankruptcy case, approved the deal earlier this month.
US Regulators Block Binance US-Voyager Deal
But the $1.2 billion restructuring plan appears to be far from being completed as various US regulators, including the SEC, have been opposing it. Further, the US Department of Justice appealed on March 9 against Judge Wiles’ ruling. As a result, the deal is now paused by a different judge to give room for the appeal to be determined.
Meanwhile, the Head of Regulatory Affairs at Blockchain Intelligence Group, Timothy Cradle, says CFTC’s lawsuit is unlikely to affect the deal because Binance US and Voyager do not engage in derivatives trading.
But there could be another hurdle when the court approves CFTC’s request to ban Binance from operating in the United States. According to Cherokee Acquisition Manager Vladimir Jelisavcic, even if Judge wiles’ ruling is upheld, the acquisition deal will still be subject to numerous regulatory approvals, which may be a problem in case the court grants CFTC its wishes.
What Drove Voyager to File for Bankruptcy
Voyager is among many crypto companies that collapsed in 2022, filing for bankruptcy in July of that year after crypto fund 3AC (Three Arrow Capital) failed to repay loans taken from the crypto lender.