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Judge Slams SEC’s Objection to Binance-Voyager Digital Deal

  • Binance (BNB-USD) is getting a big break this week in its U.S. branch’s attempt to acquire bankrupt Voyager Digital.
  • A U.S. judge is voicing skepticism over the Securities and Exchange Commission’s decision to try and block the sale.
  • This is the second time the SEC has tried to spoil a deal between the two parties.
Binance - Judge Slams SEC’s Objection to Binance-Voyager Digital Deal

Source: Shutterstock

Binance (BNB-USD) has started 2023 off on a hot streak, even as crypto isn’t nearly back to its height of popularity. That much is evident this week as Binance unveils its wildly successful non-fungible token (NFT) tool. It’s also sparked some controversy among crypto investors as it yanks support for U.S. dollars and sees regulatory uncertainty around its stablecoin. One of the biggest controversies facing the company surrounds that of its Voyager Digital acquisition. After being thwarted once by regulators, a new complaint against the companies’ deal has a judge slamming the U.S. Securities and Exchange Commission (SEC).

Binance has been attempting to bail out the bankrupt Voyager Digital for months now. Voyager had originally gone under as a result of the Terra (LUNA-USD) crash in May 2022. The company was one of three crypto investing firms to go bankrupt as a result of the turmoil. At the time, it was very highly exposed to fellow crypto company Three Arrows Capital, which held a massive position in LUNA. When the token crashed, and Three Arrows could not cover its margin calls, it catalyzed a domino effect.

Voyager Digital filed for bankruptcy in July of 2022, just two months after these events took place. Filing under Chapter 11 protections, the company has had an opportunity to create a plan to reorganize. After one fraught attempt at acquisition by the now-infamous FTX, Binance stepped in as the next-highest bidder. This came after regulators threw cold water on the plan before, requiring the company to add to its bid. Binance calls this move a xenophobic attempt to keep the company out of the equation and one which ultimately cost it its victory the first time.

Binance-Voyager Digital Bid Gets Support From Judge

After FTX’s collapse, Binance was able to handily win the second option for Voyager Digital’s assets. This time, it made the deal using its American company, Binance.US. Still though, regulators have attempted to thwart the deal. This week, the company is getting the support of a judge.

Last week, the SEC and other regulators filed an objection to the deal, which was struck up in early December. This filing comes after Voyager Digital had secured the overwhelming favor of clients, with 97% supporting Binance.US’s terms. Under the deal, these clients would be one step closer to securing their assets, which were frozen and repossessed as a result of the bankruptcy filing.

The SEC claims that Binance.US’s terms could violate securities laws. Though, it does little publicly to clarify which terms are problematic. This vague claim is being taken to task by a judge presiding over the deal. In Thursday’s courtroom meeting over the deal, Judge Michael Wiles questioned the SEC legal team’s objection. The team is refusing to pointedly  answer whether the SEC actually finds the terms to violate any laws. Wiles goes on to say (as paraphrased by a citizen journalist), “You’re asking the debtor to prove that the cryptos being transacted are not securities, but you’ve given no regulatory guide as to what that is.”

Wiles’ criticism over the SEC’s vagueness is a good sign for Voyager Digital and Binance.US. It is the court’s duty to give final approval over the sale. Skepticism toward regulators’ arguments could bode well in the attempt to secure this approval.

On the date of publication, Brenden Rearick did not hold (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 Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

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