SEC objects to Binance.US’ $1 billion Voyager deal, alleging sale of unregistered securities
A $1.02 billion deal by Binance.US to buy assets of defunct crypto lender Voyager has been opposed by New York financial regulators and federal finance officials, who said on February 22 that it could prove discriminatory and illegal.
The move follows growing interventions in crypto by the Securities and Exchange Commission, whose investigations into the alleged sale of unregistered securities recently prompted crypto exchange Kraken to shut down crypto betting operations.
Elements of the proposed Binance.US-Voyager deal could also run afoul of the law, given how the plan envisions repaying Voyager’s former customers, the SEC said.
According to the agreement, “the transactions in cryptoassets necessary to effect the rebalancing, the redistribution of such assets to account holders, may violate the prohibition of Section 5 of the Securities Act of 1933 against the unregistered offer, sale or delivery after the sale of securities,” it said in an SEC filing, specifically citing the VGX token issued by Voyager.
“It is the obligor’s burden to present credible evidence that the provisions of the plan are enforceable and not inconsistent with applicable law,” the SEC said. The regulator also cited media reports that Binance is preparing to pay fines for past violations of anti-money laundering and anti-corruption laws as evidence that the deal could become “unworkable” and “impossible to complete.”
“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 NYDFS archive.
Voyager “boarded New York customers and thereby illegally operated a virtual currency business in the state without a license, in violation of New York laws and regulations,” depriving customers of their protections, the filing added. The plan also discriminates against New Yorkers who won’t be able to recover their crypto for six months while Binance.US gets approval in the state, NYDFS said.
Voyager had previously argued that the Binance.US deal provides the best possible outcome for creditors and that NYDFS objections are “hypocritical” because the regulators themselves limit the ability to distribute crypto.
Voyager creditors themselves had until 4 p.m. Eastern Time on Wednesday to approve the deal, and the company’s lawyer has said that with a few hours of voting left, the vast majority had done so.
