US authorities demand a halt to Voyager-Binance.US’ $1 billion deal – here’s why

Plans by Binance.US to buy the assets of Voyager Digital, a collapsed cryptocurrency brokerage, have hit a snag following demands from the US government to put the proposed deal on hold.

According to court documents, both the Securities and Exchange Commission (SEC) and New York’s financial regulator have raised objections to the $1 billion transaction, citing several concerns.

The SEC said the Voyager deal may violate laws regarding the unregistered offer and sale of securities.

More specifically, the agency said the transactions in cryptoassets necessary to effectuate the rebalancing “may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after the sale of securities.”

The SEC’s objection also cited reports of US investigations into Binance.US and the global Binance crypto exchange, of which Binance.US is an allegedly independent partner. “Regulatory actions” could mean the deal could become “impossible to complete,” it said.

Similarly, New York’s top financial regulator and New York Attorney General Letitia James objected to the deal, saying Voyager was “unlawfully operating a virtual currency business in the state without a license.”

The regulator also mentioned that since Binance.US is not licensed or available in New York, Voyager customers based in the state may have to wait as much as six months to access their funds.

“New York account holders will have no ability to control the assets in their accounts, including whether to sell the cryptocurrency to avoid further risk in the volatile cryptocurrency market,” the NYDFS said, adding:

“In contrast, account holders in jurisdictions other than non-supported jurisdictions (‘Supported Jurisdictions’) will have the freedom to trade the cryptocurrency they owe, defined as ‘Net Owed Coins’ in the APA, once their Binance US accounts are set up and their assets have been migrated.”

Meanwhile, U.S. Bankruptcy Judge Michael Wiles, who initially approved the deal last week, will hold a hearing tomorrow on the new objections from the SEC and New York’s top regulator.

“The court cannot tell the government to talk now or forever hold its peace until Voyager and Binance.US marry,” Judge Williams said in a recent case. “Nothing in the Bankruptcy Code allows courts to relieve parties from liability to the government for past and future conduct.”

Binance.US’ proposed $1 billion deal to acquire Voyager will allow customers to finally be able to make withdrawals, with users estimated to be able to get back 73% of the value of their deposits.

In particular, Voyager is not obliged to accept the exchange’s offer. It will take up to a month for the company to review “new questions” about Binance.US’s commitment to the acquisition, its regulatory compliance and the security of customer deposits, the report said, citing Voyager’s financial advisers.

Voyager was a cryptocurrency broker that filed for Chapter 11 bankruptcy in July, which was followed by a bidding war between Binance and the FTX exchange. In late October, FTX secured a US bankruptcy court’s approval to take over Voyager’s assets, but it infamously collapsed soon after, and Binance was back in the game.