The Department of Justice doesn’t like provisions that would render the company immune from prosecution for former wrongdoing

The $1 billion deal offered by Binance.US to buy assets of bankrupt crypto lender Voyager should be put on hold while key legal objections are ironed out, the U.S. government said in a filing on Tuesday.

The move follows an appeal by the U.S. Trustee, a branch of the Department of Justice responsible for bankruptcy cases, which has concerns the deal would effectively absolve Voyager and its staff from breaches of tax or securities law.

“The Court cannot tell the Government to speak now or forever hold its peace before Voyager and Binance.US wed,” the filing by U.S. Attorney Damian Williams said. “Nothing in the Bankruptcy Code permits courts to exculpate parties from liability to the Government for past and future conduct.”

Williams said approval of the deal should be put on hold – or at least those parts which limit the government’s ability to enforce the law – until appeals are dealt with in higher courts.

Last week, New York bankruptcy judge Michael Wiles approved the deal, after showing considerable skepticism of arguments from the Securities and Exchange Commission that Voyager’s VGX token might be an unregistered security.

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The appeal comes just one day after Judge Michael Wiles gave Voyager Digital the go-ahead to sell its assets to Binance.US.

The U.S. Department of Justice (DOJ) filed an appeal late Thursday evening challenging a New York bankruptcy judge’s decision to allow Binance.US’s billion-dollar plan to acquire the assets of bankrupt crypto lender Voyager Digital.

The appeal, which was filed by the U.S. Trustee’s Office – an arm of the DOJ responsible for overseeing bankruptcies – comes just one day after Judge Michael Wiles approved the deal after a contentious, four-day-long marathon hearing.

Regulators, including the U.S. Securities and Exchange Commission (SEC) and various state regulators have been staunchly opposed to the proposed deal. Last month, the SEC filed an objection to the purchase of Voyager, arguing that Binance.US may be violating federal securities laws by operating an unregistered securities exchange in the U.S.

However, Judge Wiles appeared to be unmoved by the SEC’s concerns, telling the lawyers present at the hearing that the Bankruptcy Code “doesn’t contemplate an endless period of time.”

“Things have to be done. We have creditors who are waiting and who in the midst of all of this uncertainty have no access to property in which they’ve invested, in some cases, their life savings, so we have to take some kind of action,” Wiles said. “We have to do something.”

Under the proposed sale to Binance.US, Voyager’s customers would see an estimated 73% recovery. The plan, which was assembled after FTX – Voyager’s previous top bidder – filed for its own bankruptcy in November, was supported by 97% of Voyager’s creditors.

If Voyager decides not to go through with the current plan to sell itself to Binance.US – or if regulators are successful in blocking the sale – another option is for the bankrupt lender to liquidate itself, which would likely result in much smaller returns for creditors.

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Federal and New York regulators object to a billion-dollar deal they say may be unlawful and discriminatory as they examine Voyager’s VGX token.

A $1.02 billion deal by Binance.US to purchase assets of defunct crypto lender Voyager has been opposed by New York and Federal finance regulators, who said in Feb. 22 filings it could prove discriminatory and unlawful.

The move follows increasing interventions into crypto by the Securities and Exchange Commission, whose probes into the alleged sales of unregistered securities recently caused crypto exchange Kraken to shutter crypto staking operations.

Elements of the proposed Binance.US-Voyager deal may also infringe the law, given how the plan envisages repaying Voyager’s former customers, the SEC said.

Under the deal, “the transactions in crypto assets necessary to effectuate the rebalancing, the redistribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after sale of securities,” a filing by the SEC said, citing in particular the VGX token issued by Voyager.

“It is the Debtors’ burden to present credible evidence that the provisions of the Plan are feasible and not in violation of applicable law,” the SEC said. The regulator also cited media reports that Binance is bracing itself to pay penalties for past infractions of money laundering and corruption law as evidence that the deal could become “unfeasible” and “impossible to consummate.”

The deal was also opposed by New York State’s Department of Financial Services (NYDFS) and Attorney General Letitia James in two Feb. 22 filings, including allegations that Voyager was unlawfully serving customers in the state.

“Despite the fact that none of the Debtors are licensed in New York, the Department is aware of allegations and other information indicating that one or more of the Debtors may have operated and may be continuing to operate in New York in violation of Applicable Law,” the NYDFS filing said.

Voyager “onboarded New York customers and thus illegally operated a virtual currency business within the state without a license, in violation of New York laws and regulations,” depriving its customers of protection, the filing added. The plan also discriminates against New Yorkers who won’t be able to reclaim their crypto for six months while Binance.US gains approval in the state, NYDFS said.

In January, the SEC filed a limited objection to the deal, saying there wasn’t enough detail to show Binance.US could afford it. The Federal Trade Commission has also indicated it is probing Voyager, which filed for bankruptcy in July, for deceptive marketing.

Voyager had previously argued that the Binance.US deal offers the best possible outcome for creditors, and that NYDFS objections are “hypocritical” because the regulators themselves are limiting the ability to distribute crypto.

Voyager creditors themselves had until 16:00 Eastern Time on Wednesday to approve the deal, and the company’s counsel has said that with a few hours of voting left the vast majority had done so.

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CoinDesk reported last week that Binance.US would be preparing a bid for the bankrupt lending platform

Binance CEO Changpeng “CZ” Zhao has confirmed that the exchange’s U.S. wing will be making a fresh bid for crypto lender Voyager now that the defunct FTX is unable to follow through with acquiring it.

CoinDesk reported last week that Binance.US would be preparing a bid for the bankrupt lending platform, which Zhao confirmed in an interview with Bloomberg on Thursday.

“Binance.US will make another bid for Voyager now, given FTX is no longer able to follow through on that commitment,” he said.

Following Voyager’s bankruptcy, FTX emerged as the front runner to acquire the lender, with Binance’s bid said to be held back by concerns that it would represent a national security concern for the U.S. government.

“I think the U.S. national security concerns were rumors spread by FTX to try and push us out of the bid,” Zhao said. “There was never any concerns about us participating in the bid.”

Binance has been dogged by claims that it is a Chinese company, given it is the country of Zhao’s birth, though he grew up in Canada. “I am a Canadian citizen, period,” he wrote in a blog post in September.

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