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New cryptocoins that Voyager Digital Ltd. plans to issue to pay creditors in bankruptcy are actually securities that should be regulated, a lawyer with the U.S. Securities and Exchange Commission said in court on Friday, Bloomberg News reported. The comments by William Uptegrove, reflecting the views of the SEC staff, may complicate the bankrupt crypto firm’s proposal to repay creditors by issuing the digital tokens, part of a plan that also includes selling itself Binance.US, the U.S. arm of the world’s biggest crypto exchange. Uptegrove was arguing against the proposal and responding to skeptical questions about the SEC staff’s views from the judge overseeing Voyager’s bankruptcy case. The commission itself has not taken a position, the lawyer said. Uptegrove also said SEC staff have concluded that Binance.US is operating an unregulated securities exchange. Earlier Friday, a Voyager restructuring adviser testified that Binance.US is facing an investigation by the SEC. The SEC lawyer’s comments were met with a call for clarity from Binance.US. “It is regrettable that an SEC staff member would make allegations, that Binance.US and platforms like ours are operating an unregistered exchange, without specifying the assets listed on our exchange that the SEC considers to be securities,” a spokesperson for the trading services provider said. Bankruptcy Judge Michael Wiles has held two days of hearings about the Binance.US sale and the related payout plan.

Prosecutors and attorneys for FTX founder Sam Bankman-Fried are requesting the disgraced cryptocurrency entrepreneur be allowed a flip-phone or another device that’s not a smartphone while on bail, the Associated Press reported. The proposal, submitted in a letter Friday, comes as the judge in the case is deciding how to toughen Bankman-Fried’s bail requirements amid concerns the former billionaire might be communicating on electronic devices in ways that can’t be traced. Prosecutors alleged last month Bankman-Fried used a virtual private network that blocks third parties from seeing online activity, known as VPN, to access the internet twice. They also said he sent an encrypted message over the Signal texting app in January to the general counsel of FTX US, a move they argued might indicate witness tampering. Bankman-Fried has pleaded not guilty to charges that he cheated investors and looted customer deposits at FTX, his cryptocurrency platform.

Shareholders of bankrupt bitcoin miner Core Scientific Inc. will have an official voice in its chapter 11 case and a $4.75 million budget from the company to advocate for as large a recovery as possible for its equity, WSJ Pro Bankruptcy reported. Bankruptcy Judge David Jones in Houston said on Friday that he was approving the appointment of an official committee of equity holders after warning that he would closely examine — and potentially claw back — any legal fees incurred by shareholders for unnecessary litigation. Creditors including BlackRock Inc. and Apollo Global Management Inc. had opposed the formation of an official equity committee, saying its fees would eat into recoveries on the company’s secured debt, which isn’t guaranteed to be paid in full. But Core Scientific agreed to fund the equity committee after the rising price of bitcoin fueled hopes that its shares would have value despite its bankruptcy filing. Judge Jones said last week that he would respect the company’s business judgment. He also warned that he would use any tools available if the equity committee pursued litigation that didn’t add value to the chapter 11 estate.

FTX says it has identified a deficit of $8.9 billion in customer funds that it can’t account for, the first time the bankrupt cryptocurrency exchange has pinned down how much money has gone missing, WSJ Pro Bankruptcy reported. In a public presentation released yesterday, FTX said that it had identified around $2.7 billion of customer assets, compared with $11.6 billion of balances outstanding on customer accounts. The estimated value of FTX’s assets and liabilities are based on crypto prices on the day of the company’s bankruptcy filing in early November. New managers at FTX, led by restructuring veteran John J. Ray III, have been working to locate and protect billions of dollars in missing customer funds since the company filed for bankruptcy. FTX sought chapter 11 protection after allegations emerged that Alameda Research, a hedge fund started by FTX co-founder Sam Bankman-Fried, was taking customers’ funds from FTX accounts without authorization. Ray said on yesterday that it isn’t yet possible to predict how much customers will be able to recover. “[The exchange’s] books and records are incomplete and, in many cases, totally absent,” Ray said. “For these reasons, it is important to emphasize that this information is still preliminary and subject to change.” It isn’t clear whether customers will be able to recover the entirety of the $2.7 billion in assets that FTX has found. About $1.5 billion of that total included illiquid crypto assets like FTX’s token, FTT, whose value has fallen since the firm’s collapse. Around $880 million in found customer assets are considered “liquid currencies” like dollars, stablecoins, bitcoin or ether, FTX said. Around $400 million are in other receivables, the presentation shows. A great deal of the total $8.9 billion shortfall at FTX can be attributed to Alameda Research, which had borrowed $9.3 billion from customers’ accounts before the exchange went bankrupt, the presentation shows.

Stratford University, the for-profit college whose abrupt closure last year left hundreds of students without a clear path to a degree, officially filed for chapter 7 bankruptcy earlier this month, WTOP.com reported. In Feb. 2 filings with the Eastern District of Virginia’s bankruptcy court in Alexandria, the defunct college claims to hold $696,241 in assets but over $8.5 million in debt. According to the filings, $2.2 million of that debt is owed to the U.S. Department of Education for loans that the department had to discharge because of the school’s closure. Creditors have until May 12 to file proof of claims. The university quickly shuttered last September after its accreditor, ACICS, was decertified by the U.S. Department of Education for failing to meet federal standards, and Stratford failed to find a new accrediting institution. The decertification meant that Stratford — which at the time operated campuses in Woodbridge, Alexandria and Baltimore — could no longer accept federal student loans, the main revenue source for for-profit colleges. At the time, Stratford President Richard Shurtz said that without that revenue, the college could not continue to operate. The college referred its roughly 800 nursing students to other nearby for-profit colleges to transfer, but representatives for those colleges said that most of their credits would not transfer with them.

Nishad Singh followed Sam Bankman-Fried into the high-stakes world of cryptocurrency trading. Now he could help put the former FTX chief executive in prison, according to a Wall Street Journal analysis. Singh, the 27-year-old former director of engineering at FTX, pleaded guilty this week to six criminal counts, including wire fraud. He agreed to cooperate with the government’s investigation of FTX’s collapse. The deal means Mr. Singh could end up testifying against a colleague and friend whom he has known since childhood. Just a few months ago, he and Mr. Bankman-Fried were housemates in the Bahamas, living in a luxury penthouse with other executives at FTX and its sister trading firm, Alameda Research. “I’m unbelievably sorry for my role in all of this and the harm that it has caused,” Singh said in a court hearing in Manhattan on Tuesday. Singh attended the same elite Silicon Valley prep school as Bankman-Fried and was close friends with his younger brother, Gabriel Bankman-Fried. Like the Bankman-Fried brothers and several other top FTX executives, Singh was a proponent of effective altruism, a movement that urges adherents to make big bucks so they can give their fortune to charity.

As a third member of Sam Bankman-Fried’s inner circle became a prosecution witness, lawyers for the FTX co-founder were preparing for a more immediate fight: his use of the internet and mobile apps while out on bail, Bloomberg News reported. Bankman-Fried now faces the culmination of a tense standoff with the judge in his criminal fraud case over his communications. Free on a $250 million bond but confined to his parents’ house with a monitoring device around his ankle, he has already angered U.S. District Judge Lewis Kaplan by using encrypted-messaging apps and a virtual private network, or VPN, which hides a computer’s identity. “Why am I being asked to set him loose in this garden of electronic devices?” Judge Kaplan demanded at the most recent bail hearing in lower Manhattan, on Feb. 16. For now he has barred Bankman-Fried from using either of those tools and from contacting former or current FTX employees. Late Wednesday, in response to a court order, the two sides jointly proposed a pair of technology consultants to advise the skeptical judge on a raft of restrictions that balances the defendant’s rights and needs with the integrity of the judicial process. Kaplan has threatened to revoke the bail package altogether and send Bankman-Fried to jail ahead of his October trial if he isn’t satisfied with the constraints.