Mar 13, 2023
Crypto Industry Battles SEC in Legal Disputes
The crypto industry has been under the microscope of regulators around the world for the past year due to a series of court cases involving bankruptcy, liquidity issues and fraud. Major entities such as Voyager Digital, Alameda Research and Binance have been dealing with the United States Securities and Exchange Commission (SEC) in the battle over assets and owed funds. Here’s a round-up of the current status of some of the industry’s most pressing legal battles.
The situation around Voyager Digital began in July 2022 when the company filed for bankruptcy in order to return value to more than 100,000 customers who had lost millions in funds. It was soon revealed that Alameda Research, the investment arm of FTX, was the largest stakeholder in Voyager, with an initial 11.56% stake in the company. On Sep. 13, an auction began for Voyager’s assets, which was ultimately won by FTX through a $1.4 billion bid.
The crypto industry was rocked when FTX, FTX US and Alameda all announced filing for Chapter 11 bankruptcy in the U.S., along with the resignation of former CEO and co-founder Sam Bankman Fried on Nov. 11. This incident changed the trajectory of the entire industry with a domino of companies affected by their proximity to the fallen exchange.
In late December, it was revealed that Binance.US would be set to acquire Voyager Digital assets for around $1 billion. However, the SEC filed an objection to the Binance.US acquisition on Jan. 5 due to wanting to see more details included in the billion-dollar deal between the two entities.
Alameda Research opened a lawsuit against Voyager Digital for $446 million on Jan. 30, claiming that Voyager “knowingly or recklessly” channeled customer funds to Alameda. On March 7, bankruptcy judge Michael Wiles granted the deal approval, and the following day the U.S. Department of Justice filed an appeal against the approval.
On March 8, court documents revealed that Delaware bankruptcy judge John Dorsey approved that Voyager Digital will set aside $445 million in light of Alameda’s lawsuit. Alameda then revealed that it plans to sell its remaining interest in Sequoia Capital to an Abu Dhabi fund for $45 million.
The legal battle between these three entities in relation to lawmakers and regulators in the U.S. is ongoing.
The financial implications of these court cases have been significant. Voyager customers could recover 72% of their assets via the FTX deal, and Binance.US was set to acquire Voyager Digital assets for around $1 billion. FTX bid $1.4 billion on the company’s assets, and Alameda Research opened a lawsuit against Voyager Digital for $446 million. Alameda then revealed that it plans to sell its remaining interest in Sequoia Capital to an Abu Dhabi fund for $45 million.
The implications of these court cases have also extended to the web3 space. NFTs, or non-fungible tokens, have become a popular way to promote and sell crypto, with many companies offering NFT marketing services. Twitter NFT marketing is one of the most popular forms of NFT promotion, with many companies offering NFT marketing agencies and web3 agencies to help companies sell NFTs.
The legal battles between Voyager Digital, Alameda Research and Binance have had a major impact on the industry, and the implications of these court cases will be felt for a long time. With the SEC and other regulators continuing to monitor the crypto industry, it is likely that more legal battles will arise in the future.
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