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SEC comes out against Binance.US’s $1 billion deal to buy a bankrupt crypto firm’s assets

SEC comes out against Binance.US’s $1 billion deal to buy a bankrupt crypto firm’s assets


Binance.US wants to buy the now-bankrupt Voyager Digital’s assets for $1 billion, but the SEC and NYFDS don’t want to let that happen.

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Illustration by Alex Castro / The Verge

Binance.US’s proposed deal to purchase the assets from the collapsed cryptocurrency brokerage Voyager Digital is facing scrutiny from federal and state regulators, as reported earlier by CoinDesk. In a set of court filings submitted on Wednesday, the Securities and Exchange Commission (SEC) and New York’s financial regulator expressed opposition to the $1 billion deal.

Voyager Digital filed for bankruptcy last year after the now-defunct crypto hedge fund Three Arrows Capital defaulted on a $670 million loan provided by Voyager. Binance.US — the US version of the Binance trading platform — later announced its plans to purchase Voyager’s assets for $1 billion, stating at the time it could help free up some of the funds locked up in the insolvent firm.

The SEC isn’t too keen on this idea, however. It claims the transactions necessary to redistribute the assets belonging to Voyager customers may violate the agency’s rules against selling or offering unregistered securities. The agency also cites numerous concerns about the deal and says Binance.US doesn’t “adequately describe whether third parties” will have access to customer wallets.

Meanwhile, the New York Department of Financial Services (NYDFS) has another complaint, alleging Voyager operated “illegally” in the state without a license and “deprived” New York customers of the consumer protections granted by the state’s supervision. It also notes that because Binance.US isn’t licensed or available in New York, Voyager customers based in the state may have to wait longer to gain access to their funds when compared to customers in states where the service is available.

“New York Account Holders will have no ability to control the assets in their accounts, including whether to sell the cryptocurrency to avoid further risk in the volatile cryptocurrency market,” the NYDFS writes. “In contrast, Account Holders in jurisdictions other than Unsupported Jurisdictions (‘Supported Jurisdictions’) will have the freedom to trade the cryptocurrency owed to them, defined as ‘Net Owed Coins’ in the APA, once their Binance US accounts are set up and their assets are migrated.”

As federal and state regulators begin to close in on crypto firms following the demise of FTX and the arrest of the firm’s co-founder, we’re likely to see even more pushback from the government and regulatory agencies. Last December, the Federal Trade Commission opened investigations into various crypto firms over alleged misconduct, while the SEC has asked companies to disclose whether they’ve been exposed to any struggling crypto firms.