SEC Takes on Binance.US’s Voyager Acquisition in New Front to Crypto Regulation
The world’s largest crypto exchange Binance has been facing intense scrutiny lately, and the pressure doesn’t seem to be letting up. Through the exchange’s US-based “cohabitant” Binance.US, the crypto company has been looking for Pac-Man up failed exchange of Voyager Digital assets after entering into an agreement in December last year. Just months later, major regulators are asking the courts to remove the planned acquisition, saying it violates securities laws.
In court documents published Wednesday, both the Securities and Exchange Commission and the New York State Department of Financial Services signed objections to Binance’s planned acquisition of Voyager, as the company has limped through its Chapter 11 bankruptcy proceedings. The agency asked the New York Southern District Bankruptcy Court to remove the planned purchase.
In his objection to the merger, the The SEC wrote that the deal may involve trading in unregistered securities. Specifically, the agency wrote that Voyager and Binance.US have not described whether “third parties, including Binance.US affiliates or foreign persons or entities” will have access to customer wallets. This seems to indicate that Binance would have access to the former exchange’s customers and their crypto.
The Financial Supervisory Authority of New York had similar arguments, saying that Voyager “unlawfully operated a virtual currency business in the state without a license.” The department further argued that beleaguered account holders will be even less likely to get their money back since Binance.US still does not have a license to operate in the state. Voyager gets to hold users’ crypto for six months after or until the exchange gets approval, according to the acquisition, and during that time regulators say New York customers will be even more out of luck getting their money back.
Gizmodo reached out to Binance.US and an attorney representing Voyager for comment, but we did not immediately hear back. A few others raised objections to the planned Voyager purchase, including a few Voyager creditors. New York Attorney General Letitia James’ office signed the State Finance Department’s objections.
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Both control units were recently completed keep it to Binance over Paxos-issued BUSD stablecoin. The SEC had planned to sue Paxos over its stablecoin, and shortly after, New York regulators ordered Paxos to stop minting new wrapped USD coins. Paxos is now in “discussions” with the SEC regarding its stablecoin, according to Reuters. Although it is still unclear what kind of discussions there might be.
Binance and its CEO Changpeng Zhao have long tried to maintain that Binance.US is an “independent” partner. However, it has been questionable for a long time, especially since thenformer CEO Brian Brooks reportedly quit after trying to put a little more distance between it and its namesake. Last week, Reuters reports that Zhao had secret access to a bank account owned by Binance.US, and had withdrawn funds from the account for his own use. Binance.US later confirmed that a Zhao-managed firm had been operating on the platform, but claimed it “ceased all activity” in 2021.
