The SEC Has Raised Objections To Binance.US’ Proposed $1 Billion Deal To Acquire Voyager’s Assets
Regulators at the federal and state levels are opposing a billion-dollar deal over concerns that it may be unlawful and discriminatory. The deal involves the acquisition of assets of defunct crypto lender Voyager by Binance.US, and is being examined for potential violations related to the VGX token issued by Voyager.
Valentin
March 13, 2023
CoinDesk reported that Binance.US’s proposed acquisition of assets from defunct crypto lender Voyager for $1.02 billion has been met with opposition from regulators in New York and the federal government. They have filed objections on February 22, stating that the deal could be discriminatory and unlawful, citing concerns about potential violations of securities law.
The Securities and Exchange Commission has been increasingly involved in crypto regulation, with its investigations into alleged sales of unregistered securities recently leading to the closure of Kraken’s crypto staking operations.
Additionally, the SEC has expressed concerns that certain aspects of the Binance.US-Voyager deal could violate securities regulations, such as the planned transactions in crypto assets and the redistribution of those assets to account holders, which may breach the prohibition on the unregistered sale or delivery of securities outlined in Section 5 of the Securities Act of 1933.
The SEC stated that it is the responsibility of the Debtors to provide evidence that the proposed Plan is feasible and does not violate any applicable laws. The SEC also referred to reports in the media that Binance is preparing to pay fines for prior violations of anti-corruption and anti-money laundering laws as evidence that the deal may be unfeasible and impossible to complete.
In addition, the New York State Department of Financial Services (NYDFS) and Attorney General Letitia James filed two objections to the deal on February 22, alleging that Voyager was unlawfully serving customers in New York. The NYDFS filing stated that although none of the Debtors were licensed in New York, the department was aware of allegations that they may have violated state laws by operating in New York.
According to the filing, Voyager illegally conducted a virtual currency business in New York without a license, depriving its customers of protection. The NYDFS also stated that the proposed plan discriminates against New Yorkers by preventing them from reclaiming their crypto for six months while Binance.US obtains approval in the state.
The SEC had objected to the deal in January on the grounds that there was insufficient evidence to demonstrate Binance.US’s ability to afford it. Furthermore, the Federal Trade Commission is investigating Voyager for deceptive marketing after the company filed for bankruptcy in July.
Voyager had previously contended that the Binance.US deal would be the best possible outcome for creditors and criticized the NYDFS for impeding the distribution of crypto. Creditors of Voyager had until 4:00 p.m. ET on Wednesday to approve the deal, and the company’s legal representatives stated that the vast majority of them had done so with only a few hours left for voting.