By Michael Scott
Binance.US billion-dollar offer to acquire Voyager assets is set for delay as the New York State, and federal regulators objected to the $1.02 billion deal alleging unlawful and discriminatory conduct in VGX token.
A review of the February 22 filings reveals that New York State regulators replicated the federal agencies to oppose Binance.US’s $1.02 billion offer to acquire assets of bankrupt crypto lender Voyager.
SEC Objection to Binance.US Deal to Acquire Voyager
The objection to the deal reflects the recent interventions by the US Securities and Exchange Commission (SEC) to enforce actions against the cryptos.
Recent actions undertaken by SEC feature probes alleging unregistered securities’ sale as witnessed when fining Kraken $30M and shuttering its crypto staking.
Beyond the purge of San Francisco-based Kraken, SEC alleged the Binance-US-Voyager deal features proposals capable of infringing the law. The Genseler-led SEC questioned the plan envisaging the repayment of Voyager’s previous customers as insufficient.
SEC filing on February 22 questions the legality of the acquisition deal, particularly the transactions executed in cryptos to effectuate rebalancing and subsequent redistribution to Voyager’s accounts holders.
SEC Alleges Violation of Securities Act
SEC acknowledged that cryptos-based transactions would contravene the prohibition outlined in Sec 5 1993 Securities Act. SEC submission portrayed the VGX token as constituting an unregistered offer whose selling and delivery of illegal securities are prohibited in the security laws.
SEC challenged the debtors to convey credible evidence that the acquisition plans were feasible and complied with the applicable law. The regulator quoted the media publications that Binance is mulling settling penalties that regulators may impose for its previous involvement that allegedly violated money laundering and corruption laws. The regulators cited such eventualities as red flags of the deal turning unfeasible and impossible for Binance.US to honour.
NYDFS Objection to Binance.US Deal to Acquire Voyager
The Binance.US deal faced objection from the Department of Financial Services in New York State (NYDFS) in subsequent February 22 filings. NYDFS echoed the submission by the federal attorney general Letitia James alleging Voyager crypto lender of unlawfully serving state residents.
NYDFS filing on February 22 emphasized that neither of the debtors is licensed to operate in New York. The department portrayed awareness that the debtors operated within New York Jurisdiction. NYDFS cited allegations illustrating the likelihood of one debtor running operations within New York, thus violating applicable state security law.
NYDFS Cites Voyager’s Footprint in New York to Oppose the Deal
NYDFS disclosed that Voyager served multiple New York customers through its illegal operations of the virtual currency business. Its failure to seek the state’s license violated New York regulations. The filling illustrated that Voyager’s conduct left customers vulnerable to fraud.
NYDFS decries the deal, featuring a discriminatory plan to disadvantage New Yorkers. The regulator decried that they can only reclaim crypto after six months when Binance.US secures approval to operate in the state.
The opposition portrayed by SEC and NYDFS in Wednesday’s filings mirrors their limited objection to Binance.US acquiring Voyager in January. However, the argument cited in the limited objection concerned the capability of Binance.US to afford the $1.02 billion deal without the Binance Holdings injection.
FTC Cites Deceptive Marketing in Voyager’s Operations
The Federal Trade Commission (FTC) also delved into opposing the acquisition of Voyager. The trade watchdog revealed initiating a probe on Voyager’s conduct, alleging it engaged in deceptive marketing that duped customers only for it to seek bankruptcy protection in July.
Voyager tore into the allegations cited by the regulators, including NYDFS, FTC, and SEC to oppose the Binance.US deal. The crypto lender indicated that the $1.02 billion offer was the best outcome for its creditors. Voyager’s attorney termed the regulators’ arguments as hypocritical as their actions limited the capability to distribute the crypto.
The crypto lender’s counsel disclosed that Voyager creditors voted to approve the Binance.US deal. The counsel informed the court that 97% of creditors voted in favour of approving the Binance.US deal hours before the February 22 deadline.
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