Binance's Nightmare: Can A $1B Crypto Deal Survive A Legal Battle With The CFTC?

A New York judge stated on Friday that the U.S. government possesses a "considerable case on the merits" in its effort to halt Binance.US's $1 billion acquisition of the assets of insolvent cryptocurrency lender Voyager.

District Judge Jennifer Rearden expressed her intention to expedite the resolution of this dispute, as delays could result in monthly costs of up to $10 million for the estate.

In March, U.S. Bankruptcy Judge Michael Wiles initially approved the sale. However, Rearden decided to suspend the approval as she evaluates the U.S. Attorney's concerns that the agreement effectively grants Voyager immunity by shielding it from violations of tax or securities law.

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Rearden noted that the government's arguments have been left "entirely unchallenged" by Voyager and its creditors, as neither party has presented any justification for the assertion that a bankruptcy court can absolve criminal liability.

In her additional rationale published on Friday, Rearden seemed to side with the government's position, stating that "the Exculpation Clause appears to extend beyond the scope permitted by the quasi-judicial immunity doctrine."

Binance's U.S. subsidiary placed a bid for Voyager last year after FTX, the former bidder, itself fell apart.

This week, the Commodity Futures Trading Commission filed a lawsuit against Binance's global entity and its CEO, Changpeng Zhao, for offering unregistered crypto derivatives.

Zhao called the lawsuit an "incomplete presentation of facts."

Rearden has established a tight schedule to address the Voyager matter, requesting the government to submit its brief by April 7, with a response from Voyager due by April 18.

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Disclosure: Benzinga CEO Jason Raznick is a member of the unsecured creditor committee in the Voyager Digital bankruptcy case.