Crypto Crackdown Continues as SEC Protests Binance/Voyager Deal

State and federal regulators want to prevent Binance.US from buying bankrupt crypto rival Voyager.

Court filings Wednesday (Feb. 22) show both the Securities and Exchange Commission (SEC) and the New York Department of Financial Services (NYDFS) objecting to the $1 billion deal, saying it could be illegal.

The filing follows last month’s limited objection by the SEC to the purchase and comes amid a wave of regulatory action against the cryptocurrency industry.

According to the SEC, Binance.US’ — the American arm of the world’s largest crypto firm — planned acquisition could violate laws governing the unregistered sale of securities. The commission also worries about the reported criminal investigations into Binance.

“There are numerous public reports and press accounts concerning investigations into the purchaser and its affiliates,” the filing said. “Regulatory actions, whether involving Voyager, Binance.US or both, could render the transactions in the plan impossible to consummate, thus making the plan unfeasible.”

Reached for comment by PYMNTS Thursday, a Binance.US spokesperson said the company will “work with relevant parties to provide any requested information,” adding that the company’s “customer assets always remain on the platform, are held on a 1:1 basis and are fully reserved.”

“We look forward to bringing Voyager customers to Binance.US, and are pleased that 97% of Voyager customers have already voted to approve our plan,” the spokesperson said.

PYMNTS has contacted Voyager for comment but has not yet received a reply.

In its objection to the sale, the NYDFS cited allegations that Voyager was illegally serving customers in New York.

“Despite the fact that none of the Debtors are licensed in New York, the Department is aware of allegations and other information indicating that one or more of the Debtors may have operated and may be continuing to operate in New York in violation of Applicable Law,” the filing said.

Binance.US announced plans to buy Voyager’s assets in December, saying it hoped to return customer funds as quickly as possible.

Voyager Digital filed for Chapter 11 bankruptcy protection in July of 2022, saying in its filing before the bankruptcy court for the Southern District of New York that it was “facing a short-term ‘run on the bank’” after a borrower defaulted on a $650 million loan.

The SEC’s objection to the deal comes as the agency is undertaking a broader crackdown on the crypto sector. As PYMNTS wrote Wednesday, SEC Chairman Gary Gensler has “issued a number of warning shots across the bow of the digital asset industry since the start of the new year, each with huge potential implications for the crypto landscape.”

The chair has repeatedly said that most crypto tokens in issuance are securities, as there are almost always business interests connected to each token effort.

The crypto industry has disputed this assertion, PYMNTS wrote, and the lack of regulatory clarity in the U.S. has seen many companies set up shop overseas, “at times to disastrous results for both themselves and their customers.”