The U.S. Government’s bid to quash a $1 billion deal between Binance.US and Voyager, a bankrupt crypto lender, has gained ground.

District Judge Jennifer Rearden has stated that the government’s case has “substantial merits” and that she will try to settle the dispute quickly to avoid costly delays for the estate.

U.S. Bankruptcy Judge Michael Wiles had previously approved the sale in March, but Judge Rearden has put it on hold while she considers objections from the U.S. Attorney.

The contract between the two companies exculpates Voyager from breaches of tax or securities law, rendering it immune to criminal liability, according to the government. Voyager and its creditors have failed to provide any authority to refute these claims, leaving Judge Rearden sympathetic to the government’s arguments.

Binance’s U.S. arm bid for Voyager last year after FTX, the previous bidder, collapsed. However, this week saw Binance’s global entity and CEO, Changpeng “CZ” Zhao, sued by the Commodity Futures Trading Commission for offering unregistered crypto derivatives. Zhao has dismissed the suit as an “incomplete recitation of facts.”

The case highlights the ongoing legal scrutiny surrounding the crypto industry, as regulators seek to establish clearer rules around digital assets.

The outcome of the Voyager-Binance.US deal could have significant implications for the industry as a whole, particularly around bankruptcy law and criminal liability.