U.S. Binance Arm Facing Legal Challenge From SEC Over Voyager Digital Purchase


  • The Securities and Exchange Commission (SEC) is filing an objection to Binance.US’ (BNB-USD) purchase of Voyager Digital assets.
  • Voyager Digital announced Binance.US’ acquisition of the company in December.
  • The U.S. government has previously challenged the global Binance company’s attempt to buy the assets on auction.
Binance - U.S. Binance Arm Facing Legal Challenge From SEC Over Voyager Digital Purchase

Source: JOCA_PH / Shutterstock.com

The fall of FTX (FTT-USD) made for the most spectacular news story of the last year. However, while much of the interest has fallen on its founder, Sam Bankman-Fried, the effects of the company’s collapse are far-reaching and still very much present across the market. One company roiled by the disastrous sequence of events has been Voyager Digital. The company’s bankruptcy has been impeded for months by FTX’s involvement and subsequent bankruptcy of its own. Lucky for it, it seems that FTX’s rival Binance (BNB-USD) is trying to save it via its Binance.US arm. First, Binance.US will need to go through the Securities and Exchange Commission (SEC).

Voyager Digital was one of the first crypto companies to fall as a result of the crypto winter. With the Terra (LUNA-USD) collapse in May, the company had tanked due to its exposure to the LUNA-heavy Three Arrows Capital balance sheet. By July, it would be filing for bankruptcy protection.

Voyager Digital had been poised to sell its remaining assets to FTX just one month before the latter company’s implosion. In a court-ordered bankruptcy auction, FTX secured the assets with a winning bid of $1.4 billion. As investors now know, this transaction would never go through, since FTX fell into its liquidity crisis and subsequent bankruptcy only weeks after.

By mid-December, Voyager Digital announced its intention to sell these assets once again — this time, to Binance.US. The exchange got a much better deal than its fallen competitor, paying just over $1 billion for the assets. However, it seems Binance.US has a bit of work to do if it wants to ensure a smooth transaction.

SEC Legal Challenge Is the Second Roadblock Complicating Binance Voyager Digital Bid

Binance and the U.S. government have had a tumultuous relationship with each other, that much is certain. The SEC has been a central character in the struggle between the two, launching several probes into Binance. This week, it is continuing to levy new challenges against the company with an objection to Binance.US’s purchase.

On Wednesday afternoon, the SEC filed an objection to Binance.US’s $1 billion bid for Voyager Digital’s assets. The government agency complains that the terms of the acquisition lack many details. Namely, the body inquires about how Binance.US plans to fund the acquisition, and how it will secure clients’ assets during the deal.

It’s clear that these complaints are rooted in the recent FTX meltdown. Seeking to prevent another catastrophe that would affect thousands of Binance.US users’ funds, these questions could provide the transparency that many of these clients would like to see.

Though, the SEC’s filing is not without its controversy. Discussion on social media suggests that the SEC filed its objection because it doesn’t believe Binance.US could fund the acquisition without receiving funding from its global counterpart.

This certainly isn’t the first time the government has foiled Binance’s attempts to buy Voyager Digital’s assets, either. The global Binance entity was the largest competitor to FTX during the initial Voyager Digital auction. However, it claims it was unfairly discriminated against by the Committee on Foreign Investment in the U.S. (CFIUS) when the agency requested additional money atop the bid in case of a CFIUS review. Binance has been vocal in its belief that the request was a result of a mischaracterization of the company as a Chinese entity.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/01/u-s-binance-arm-facing-legal-challenge-from-sec-over-voyager-digital-purchase/.

©2024 InvestorPlace Media, LLC