Cryptocrackdown continues as SEC protests Binance/Voyager deal

State and federal regulators want to prevent Binance.US from buying bankrupt crypto rival Voyager.

Court records on Wednesday (February 22) show both The Security and Exchange Commission (SEC) and the New York Department of Financial Services (NYDFS) object to the $1 billion deal, saying it may be illegal.

The submission follows last month’s limited objection by the SEC to the purchase and comes amid a wave of regulatory action against the cryptocurrency industry.

According to the SEC, planned acquisitions by Binance.US – the American arm of the world’s largest crypto firm – could violate laws governing unregistered sales of securities. The Commission is also concerned about the reported criminal investigations into Binance.

“There are numerous public reports and press accounts of investigations into the buyer and its affiliates,” the filing said. “Regulatory actions, whether involving Voyager, Binance.US, or both, could make the transactions in the Plan impossible to complete, thereby rendering the Plan unfeasible.”

Reached for comment by PYMNTS on Thursday, a spokesperson for Binance.US said the company will “work with relevant parties to provide all requested information,” adding that the company’s “customer assets always remain on the platform, held on a 1:1 basis and is fully reserved.”

“We look forward to bringing Voyager customers to Binance.US, and are pleased that 97% of Voyager customers have already voted to approve our plan,” the spokesperson said.

PYMNTS has reached out to Voyager for comment, but has yet to hear back.

In his objection for the sale, the NYDFS cited allegations that Voyager served clients illegally in New York.

“Despite the fact that none of the debtors is licensed in New York, the Department is aware of allegations and other information indicating that one or more of the debtors may have operated and may continue to operate in New York in violation of applicable law,” it said that in the submission.

Binance.US announced plans to buy Voyager’s assets in December, and said it hoped to return customer funds as quickly as possible.

Voyager Digital filed for Chapter 11 bankruptcy protection in July 2022, saying in its filing with the Bankruptcy Court for the Southern District of New York that it faced a short-term “run on the bank” after a borrower defaulted on a $650 million loan.

The SEC’s objection to the deal comes as the agency mounts a broader crackdown on the crypto sector. Like PYMNTS wrote On Wednesday, SEC Chairman Gary Gensler “has issued a series of warning shots across the bow of the digital asset industry since the start of the new year, each with huge potential implications for the crypto landscape.”

The chairman has repeatedly said that most crypto-tokens in issue are securities, as there are almost always business interests attached to every token stake.

The crypto industry has contested this claim, PYMNTS wrote, and the lack of regulatory clarity in the US has led many companies to set up shop abroad, “at times to disastrous results for both themselves and their customers.”