New York and Federal financial regulators opposed a $1.02 billion deal by Binance.US, the US arm of popular Bitcoin and altcoin exchange Binance, to buy the assets of the now-defunct crypto lender Voyager. Regulators said the move could be discriminatory and illegal, in filings filed on February 22. Here are the details…
Bitcoin exchange opposes Voyager deal
The move comes after U.S. Securities and Exchange Commission (SEC) interventions, whose investigations into the alleged sale of unregistered securities, as we have also reported on Cryptokoin.com, have caused crypto exchange Kraken to cease its crypto staking operations. The SEC said elements of the proposed Binance.US-Voyager deal could also violate the law, given how the plan envisions refunding Voyager’s former customers.
According to the agreement, “transactions in crypto assets necessary to effect rebalancing, redistribution of such assets to account holders may be in violation of the Securities Act of 1933. The SEC specifically pointed to the VGX coin issued by Voyager. “It is the debtor’s responsibility to provide credible evidence that the provisions of the plan are enforceable and do not violate applicable law,” the SEC said.
The regulator also cited media reports that Binance is preparing to pay penalties for past money laundering and corruption law violations as evidence that the deal could become “impossible” and “impossible to complete.” The New York State Department of Financial Services (NYDFS) and Attorney General Letitia James also challenged the deal in two filings on February 22, including allegations that Voyager served customers in the state illegally.
Voyager: Binance.US deal best option for users
According to the NYDFS, “Although none of the borrowers is licensed in New York, the department is aware of allegations and other information that one or more borrowers may have and continue to operate in New York in violation of applicable law.” Voyager “provided services to New York customers, thereby violating New York laws and regulations.” As such, it illegally traded cryptocurrencies within the state without a license, depriving its customers of protection. NYDFS said the plan also discriminates against New Yorkers who won’t be able to get their coins back for six months while Binance.US gets state approval.
In January, the SEC made a limited objection to the deal, saying it did not have sufficient evidence to show that Binance.US could afford the deal. The Federal Trade Commission also said it was investigating Voyager, which filed for bankruptcy in July, for misleading marketing. Voyager has previously argued that the Binance.US deal offers the best possible outcome for creditors and that the NYDFS objections are “hypocritical” because they limit the ability of regulators to distribute crypto themselves. It’s worth noting that Voyager creditors approved the deal.
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