SEC opposes Binance.US’s $1 billion acquisition of Voyager Assets

Last month, Binance.US proposed a $1 billion acquisition deal to get its hands on the assets of bankrupt crypto-currency lender Voyager Digital. Although Voyager agreed to pursue the deal, the U.S. Securities and Exchange Commission (SEC) objected.

On Wednesday, January 4, the SEC filed a limited objection to the acquisition while questioning the adequacy of the information provided by Binance.US in its disclosure statement. In particular, the SEC pointed to the details of Binance.US’s ability to “consummate a transaction of this magnitude“.

SEC vs Binance.US

In addition, it also wants to know how the crypto-currency exchange will secure customer assets and how it would rebalance its crypto-currency portfolio. The securities regulator further noted that it has expressed its concerns to the binance.US board. The crypto-currency exchange said it would file a revised disclosure statement before the next motion hearing.

SEC basically objecting on the grounds that Binance US couldn’t have this size of assets without some untoward dealing (likely with parentco)

Which would mean a commingling of the US entity. So if Binance fights it they risk US exposure… https://t.co/9wW6eRTol7

– Adam Cochran (adamscochran.eth) (@adamscochran) January 4, 2023

A limited injection is similar to the normal objection, however, applies only to a specific part of the proceedings. Interpreting the SEC’s objections, some commentators have stated that the securities regulator is suggesting that Binance.US will not be able to afford the acquisition without “some untoward transactions” such as receiving funds from the global Binance entity. The former head of growth at DCG, Adam Cochran, explains. :

“The SEC is essentially objecting to the fact that Binance US could not have that size of assets without an untoward transaction (presumably with the parent company), which would mean a blending of the US entity. So, if Binance objects, it risks exposure to the US.”

Previously, Binance CEO Changpeng Zhao had clarified that Binance.US was a completely independent entity.

Voyager seeks court approval

Struggling crypto-currency lender Voyager Digital is now seeking bankruptcy court approval to sell its assets. Voyager will make the request at a court hearing later today, January 5.

Separately, the Texas Department of Banking and the Texas State Securities Board have filed an objection to the sale, saying that Binance.US and Voyager Digital “are not in compliance with Texas law and are not authorized to operate in Texas“. They also objected to the “disparate treatment of creditors in some States“.

As said, Voyager Digital had agreed to sell its assets in a deal worth a total of $1.022 billion. The troubled crypto-currency lender said Binance’s offer was “the highest and best offer for its assets“, which would maximize the value returned to customers and creditors “in an accelerated time frame.“