SEC Objects to Binance.US’ $1B Voyager Acquisition Deal, Says Lender Might Have Sold Unregistered Securities

The SEC is investigating whether Binance.US, Voyager, and other related entities have violated federal securities laws.

Two men point fingers at another man
  • The SEC is investigating whether Binance.US, Voyager, and related entities have violated federal securities laws.
  • The agency pointed to Voyager’s VGX token as a potentially unregistered security.
  • The SEC also expressed concern about possible security issues at Binance.US.

The United States Securities and Exchange Commission (SEC) has objected to Binance.US’ intention to acquire over $1 billion of assets belonging to bankrupt crypto lender Voyager.

According to the filing submitted to the U.S. Bankruptcy Court for the Southern District of New York, the SEC is formally investigating whether Binance.US, Voyager, and other related entities violated the antifraud, registration, and other provisions of the federal securities laws.

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In particular, the SEC expressed concerns related to Voyager’s inability to explain how it’s going to be able to sell crypto assets to distribute to its investors in compliance with federal securities laws. The agency used Voyager’s token VGX as an example, saying that selling it as part of the restructuring plan could constitute an unregistered offer or sale of securities.

“Creditors and stakeholders are entitled to know whether this transaction provides them a meaningful economic benefit, or whether this is just a $20 million sale of Voyager’s customer list to Binance.US.”

The SEC also said that Binance.US could be defined as an exchange without registering as a securities exchange. The agency pointed to safety issues at Binance.US and the recent reports describing investigations into Binance.US and its affiliates.

Gary Gensler. Crypto regulation in 2023

SEC Chairman Gary Gensler.

SEC Points to Binance.US Security Issues

On top of the securities laws concerns, the SEC pointed to potential security issues at Binance.US. 

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According to the filing, the Voyager restructuring plan fails to “adequately” describe whether Binance.US and other related entities will gain access to customers’ wallet keys or control whoever has access to those wallets. 

The agency also said there’s no sufficient explanation on how the parties will ensure that customer assets aren’t transferred off Binance.US and what internal controls and practices Binance.US has implemented to keep customer assets safe.

“Creditors and stakeholders are entitled to know whether this transaction provides them a meaningful economic benefit, or whether this is just a $20 million sale of Voyager’s customer list to Binance.US.”

The SEC also highlighted in its filing that “numerous public reports and press accounts” describe investigations into Binance.US and its affiliates. For example, the SEC recently forced Paxos, the issuer of Binance-branded BUSD stablecoin, to stop issuing BUSD because it’s a security.

On the Flipside

  • Neither Binance.US nor Voyager has responded to the SEC’s objection.

Why You Should Care

Binance.US and its affiliates face such pressure from U.S. regulators that there have been reports that Binance is considering exiting from the U.S. market altogether. Users using centralized exchange should consider following this story closely to avoid any potential FTX or Kraken scenarios.

Learn more about Binance’s latest regulatory woes:

Binance to Cease US Dollar Transfers for Non-US Customers

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Arturas Skur

Arturas Skur is a cryptocurrency news reporter at DailyCoin who covers Web 3.0 domains, DeFi, and Ethereum Layer-2s. With over five years of experience in journalism and public relations, Arturas brings his critical thinking and analytical abilities to deliver insightful news stories. In his free time, he enjoys hiking, playing with his dog, and reading.