The SEC is facing criticism for its recent bankruptcy filing for FTX, echoing its controversial approach in the Voyager case.
Recently Submit filesThe US Securities and Exchange Commission has warned FTX that it may oppose plans to repay creditors using stablecoins or other digital assets, citing potential legal concerns.
This means that the SEC could challenge FTX’s current plan to pay creditors in cash or stablecoins pegged to the US dollar, despite the agency’s objections to a provision that would shield FTX from future legal liabilities.
James Murphy, Attorney and Strategic Advisor, Hang on On September 2, reports indicated that Voyager’s 2022 bankruptcy and the SEC’s repeated tactic of obscuring cryptocurrency transactions and clarity, which critics claim is stalling the bankruptcy process.
In the case of Voyager’s bankruptcy, the company filed for Chapter 11 bankruptcy in July 2022 after suffering significant financial distress, largely due to the collapse of its main debtor, Three Arrows Capital.
The SEC has been closely monitoring Voyager’s plans to repay customers using stablecoins, expressing concerns that such repayments could be considered unregistered securities. This has complicated the bankruptcy resolution and caused delays and legal challenges.
During the process, a judge criticized the SEC for its vague objections to stablecoins, according to Murphy, insisting that regulators should clearly state their concerns if they have any.
Latest SEC FTX File
The SEC’s latest filing in the FTX case warns that it may again challenge the legality of paying creditors with stablecoins or other digital assets. However, the agency refrains from declaring such actions illegal, reserving the right to object in the future.
This repeated lack of clarity has angered industry watchers who believe it undermines the SEC’s mission to protect investors.
“Investors, consumers and markets deserve better. Much better.” I tweeted Paul Grewal, Coinbase’s chief legal officer, responds to the lack of transparency.
Critics argue that the SEC’s approach adds more uncertainty to an already complex bankruptcy process, leading some to question whether the strategy truly serves investors’ interests or simply prolongs the entire bankruptcy process.
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