A judge in the Southern District of New York says he will stop the SEC from interfering with a bankruptcy case by claiming a new crypto asset is a security.
Judge Michael Wiles says he will not allow the U.S. Securities and Exchange Commission to punish executives and advisors working on proposals to create a new token that would help repay customers, reports Bloomberg.
The SEC issued an objection to bankruptcy proceedings for the embattled crypto lender Voyager early this year, which would help repay customers affected by the lender’s collapse.
Judge Michael Wiles initially said he needs specifics on why the SEC objects and why it has decided to “stop everybody in their tracks” with little to no explanation of its concerns.
Now, in a new ruling, Judge Wiles says the SEC’s stance would do nothing but damage, leaving “a sword hanging over the heads of anybody who’s going to do this transaction.”
The judge blasted the SEC’s interference, asking, “How can a bankruptcy case or any court proceeding function with that kind of suggestion?”
The bankruptcy proceedings stem from Binance.US’s acquisition of more than $1 billion worth of assets from Voyager, a deal that was signed after FTX’s plans to acquire the assets vaporized.
Judge Wiles says that in the future, the SEC can pursue Binance.US or Voyager’s attempts to actually issue a bankruptcy token.
But he says it would be plainly wrong to punish individuals for working on their proposals in court.
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Featured Image: Shutterstock/Marian Salabai/Natalia Siiatovskaia