The United States Securities and Exchange Commission (SEC) has moved to disapprove a $1.02 billion acquisition deal between the troubled crypto brokerage company Voyager Digital and Binance.US, the American affiliate of crypto exchange Binance, citing possible violations of U.S. federal laws.
SEC Objects to Voyager-Binance Deal
Recall that Voyager agreed with Binance.US to purchase its assets after last year’s FTX collapse. The now-bankrupt Sam Bankman-fried crypto exchange previously won the bid to buy out Voyager during its auction before its unfortunate ending in November.
A court in the United States approved the deal in January, allowing Binance to acquire the distressed brokerage firm with the creditor’s support.
A few days after the court’s decision, Voyager’s Committee of Unsecured Creditors (UCC) also authorized the crypto exchange to purchase over $1 billion of the assets.
SEC Probes Voyager
Despite the approval, the SEC has now moved to object to the planned purchase, claiming that some aspects of the asset restructuring plan could breach the American securities rules.
The market watchdog has officially begun investigating Voyager to uncover whether the Debtors and others violated the federal securities laws, anti-fraud, registration, and other provisions.
According to a court document filed on February 22 in the U.S. Bankruptcy Court in the Southern District of New York, the SEC alleged that the Debtors’ disclosure agreement and the Plan failed to provide adequate information regarding the security assets on the Binance.US platform.
Protecting Customers
The Commission further argued that the planned purchase does not include information regarding whether third parties, including Binance.US affiliates or foreign persons or entities, will have access to the keys for customer wallets or control over anyone with access to such wallets.
The filing also stated that the disclosure statement failed to describe what security measures had been established to ensure that the assets were not transferred to the Binance.US platform.
Additionally, the financial watchdog said the statement did not capture the impact of potential regulatory actions on the purchaser, referring to Binance.US, on customers and their ability to trade cryptocurrencies on the platform.
“There are numerous public reports and press accounts concerning investigations into the purchaser and its affiliates. Regulatory actions, whether involving Voyager, Binance.US, or both, could render the transactions in the Plan impossible to consummate, thus making the Plan unfeasible,” the filing reads.
SEC Asks Voyager to Provide Evidence
The SEC said no declaration had been filed by the Binace.US relating to its internal controls and safety practices to ensure the safety and custody of customer’s assets despite the Debtor’s witness representations at the disclosure statement hearing regarding its protocols.
Due to the unavailability of the required information, the Commission has now called on Voyager to provide evidence of who will control its customers’ assets held on the Binance.US platform.
Similarly, the Commission asked the parties involved in the planned purchase to describe the nature of the controls and safeguards over such assets held at Binance.US post-confirmation.
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