Why Is Voyager (VGX) Crypto Up 50% Today?

For context, Reuters reported in July 2022 that Voyager filed for bankruptcy. At the time, the news agency noted that “[c]crypto-lenders like Voyager flourished in the COVID-19 pandemic, attracting depositors with high interest rates and easy access to loans rarely offered by traditional banks.” Unfortunately, the combination of a sector downturn and the implosion of two major tokens hurt the digital asset space.

Fast forward to March 7, CoinDesk reported that Michael Wiles, a bankruptcy judge for the Southern District of New York, overruled various objections to Binance.US’ bid to acquire the bankrupt lender’s assets. In total, the agreement has a value of more than 1 billion dollars.

To be sure, the judge noted, he must work through the confirmation order. Nevertheless, he indicated that he was in favor of approving the agreement. Inherently, this development represents a blow to the US Securities and Exchange Commission (SEC). Per Reuters“SEC Attorney William Uptegrove told Wiles at a hearing last week that SEC investigators believe Binance.US is operating an unregistered securities exchange.”

However, Wiles did not find the argument convincing, stating that the regulatory agency failed to present any concrete evidence. Additionally, he said the SEC should not have waited until the last minute to address a specific concern.

VGX Crypto still has a challenging road ahead

On paper, favoring a proposed deal bodes exceptionally well for the VGX crypto and the broader blockchain ecosystem. This narrative confirms that the SEC cannot, without pushback, arbitrarily declare virtual currencies to be securities, thereby forcing digital assets under its purview. It also shows that legal authorities can be open to the changing tides of the monetary paradigm.

In addition, the lifeline extended to the VGX crypto restores some degree of trust and credibility to the beleaguered blockchain. In a comedy of errors, FTX previously proposed a bid to secure Voyager’s assets before it also declared bankruptcy. Under the proposed deal, Voyager estimates the sale will allow customers to recover 73% of the value of their deposits at the time of the bankruptcy, as of Reuters.

For the VGX crypto specifically, it gives some hope that it can provide capital returns for speculators. Nevertheless, massive obstacles remain for VGX. In the following year, the crypto lost approximately 62% of its market value. As for VYGVQ stock, it fell over 99% in the same period.

Further, Voyager’s financial advisors stated that it will need up to four weeks to review new questions about Binance.US’s commitment to the acquisition, Binance.US’s regulatory compliance, and the security of Binance.US’ customer deposits, according to the filing. Reuters.

In addition, the agreement faces scrutiny from the Committee on Foreign Investment in the United States (CFIUS). The agency is investigating national security risks related to foreign investment in Voyager. Binance.US, for its part, insists that it operates completely independently of its international parent company Binance.

Why it matters

Although the VGX crypto had a strong day during the midweek session, the broader blockchain market remains lackluster. Currently, the total market capitalization of all cryptos barely hovers at $1 trillion. Risk on assets has struggled since central bank governor Jerome Powell opened the door to further rate hikes.

At the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.