Binance.US Approved to Buy Voyager Accounts Despite SEC Warning
Binance’s US affiliate received court approval to take over thousands of customer accounts from bankrupt crypto platform Voyager Digital Ltd.
despite warnings that the Binance.US exchange is facing possible regulatory action.
Judge Michael Wiles of the US Bankruptcy Court in New York approved the companies’ agreement, undeterred by the revelation last Friday that Securities and Exchange Commission staff had determined that Binance.US, the US affiliate of the world’s largest crypto exchange, was operating an unregistered securities exchange .
The SEC staff’s view that Binance is operating an unregistered exchange in the US has not been confirmed by the agency’s commissioners, but indicates that the SEC may take enforcement action. Judge Wiles said on Tuesday that he could not stay the deal between Voyager and Binance.US simply because the SEC warns of possible future enforcement, especially since the agency did not present any evidence that the companies could rebut.
“The SEC did not say why they say Binance.US operates as a securities broker. If we were to try to resolve the issue, we would have to guess,” Judge Wiles said in his ruling.
The judge’s ruling clears the way for Voyager to transfer the roughly $1 billion in cryptocurrency it holds to Binance.US, where customers will receive new accounts to access some of the assets that have been frozen since Voyager filed for Chapter 11 last year.
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In court hearings that began last week, Judge Wiles considered Voyager’s plan to sell its customer accounts to Binance.US, liquidate the bankruptcy case and distribute what remains of the business to customers. US state and federal regulators have expressed doubts about the viability of the proposed deal, citing risks from ongoing regulatory investigations of Binance.US.
On Tuesday, Judge Wiles said the SEC did not go so far as to allege that the sales or activities of Binance.US would violate securities laws, or even provide a reason why they might do so.
The SEC “did not affirmatively assert that [Voyager] did anything wrong, nor that Binance.US did anything wrong, Judge Wiles said.
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Voyager customers, who voted 97% in favor of the deal, have the option of getting their money back in cash if they choose not to transfer assets to Binance.US. Voyager has estimated that clients could get as much as about 70 cents on the dollar under the Chapter 11 plan, the investment banker testified.
A representative for Binance.US said Tuesday that it is pleased the bankruptcy court “agrees with 97% of Voyager customers who voted that our plan provides the best path forward for Voyager users to take back control of their assets.”
Global exchange Binance is facing ongoing US regulatory and law enforcement investigations into its operations and expects to pay penalties. The Wall Street Journal has reported that the SEC has been investigating trading practices at Binance.US, including whether it disclosed conflicts of interest to its customers.
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The Journal reported separately this week that Binance and Binance.US have been more intertwined than the companies have revealed.
Voyager’s investment banker faced questioning in court about how it ensured customer funds would be safe with Binance.US and not used for the kind of risky investments that have blighted other crypto platforms. However, Judge Wiles said he had no evidence that Binance.US is at risk of failure.
Write to Soma Biswas at [email protected]
