SEC Lawyer Claims Binance.US Is Selling Unregistered Securities

US Securities and Exchange Commission attorney William Uptegrove argued in a Voyager bankruptcy hearing that SEC staff believe Binance.US is operating an unregistered securities exchange.

He added that staff agree that Voyager’s VGX token offering and sale bear the hallmarks of a securities transaction.

Voyager bankruptcy judge refuses private discussion with SEC attorney

Uptegrove also confirmed that his statements did not represent the statements of other SEC commissioners. These include chairman Gary Gensler and pro-crypto commissioner Hester Peirce.

Bankruptcy Judge M. Wiles is deciding whether to approve a plan Voyager’s creditors have agreed to sell the bankrupt firm’s assets to Binance.US.

Wiles actively opposed a decision by the SEC to block the acquisition due to a lack of evidence. When asked to appear in private regarding the SEC’s objection, the SEC’s counsel argued that any SEC argument supporting its opposition to the Binance deal is fit for consumption in public court.

Uptegrove responded that the SEC’s investigations are private and complex, while at the same time neither confirming nor denying any pending enforcement actions.

The American Bar Association’s Code of Professional Conduct prohibits ex parte communications regarding material matters. Rules also prohibit Judge Wiles from independently investigating any claims. He would also have to notify the opposition if Uptegrove disclosed material information privately.

Binance.US said it was disappointed that the attorney would charge the company without a list of infringing cryptocurrencies.

Three US senators have asked Binance.US to disclose financial information and compliance policies to prove the legitimacy of the business.

SEC wants to say I told you so, judge says

Judge Wiles had made clear on previous occasions that he viewed the SEC’s objection as reckless and flawed.

“You come here and tell me … that I should stop everybody in their tracks because you might have a problem. That’s a little bit of an odd objection,” Wiles said.

The SEC had previously alleged that the distribution of Voyager’s assets “may violate” securities laws. The agency also said that allegations of money laundering and corruption against Binance.US could make the deal “impossible to complete.”

The SEC’s filing wording contains speculative, forward-looking language that Wiles had previously claimed did “nothing” to change its mind.

“I get the feeling that this objection has been made as a kind of cover so you can say later we’ll see we’ve raised these issues,” he said at an earlier hearing.

In effect, the SEC contends that the distribution of Voyager assets to creditors following the Binance.US acquisition may constitute an unregistered securities offering.

The SEC makes the requirement without recommendations that Binance.US could follow to mitigate such a problem before or after the acquisition.

Peirce had previously criticized the SEC’s regulatory approach, which involves cutting off US customers from what the SEC considers to be securities instead of contributing to a clear registration scheme.

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