- The agency claims the deal amounts to a sale of unregistered securities.
- Voyager creditors could redeem their funds through Binance.US accounts if the plan sails through.
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A judge in the US overseeing the bankruptcy proceedings of Voyager Digital has agreed to let the crypto lender sell its assets to Binance.US for $1.3 billion, against concerns by the Securities and Exchange Commission.
Judge Michael Wiles of the Southern District of New York earlier faulted the commission for casting vague doubts on the deal, according to a report by Reuters. SEC told the court that Voyager could not prove that the deal complies with the US securities law, an argument Wiles criticized for lacking specifics.
The ongoing deal will have Voyager relinquish control of its customers’ accounts to Binance’s US affiliate, allowing users to make withdrawals that were blocked last summer. Also included in the arrangement is a $20 million cash payment to the voyager debtors.
Despite the green light, Voyager still needs final approval from the SEC and the Committee on Foreign Investment in the United States (CFIU). Also in the objection reasons by the SEC is the claim that Voyager’s VGX token, a digital asset the lender plans to use in compensating investors, could be a security, and the whole compensation process could amount to the issuance of an unregistered security.
CFIU is concerned about the security risks to investors, and the independence Binance claims to have from Binance.US. Although the former has long claimed it is independent of the latter, Brian Brooks, the former CEO of Binance US, was forced to quit in 2021 over a controversy with Changpeng Zhao.
Other regulators saying no to the deal
Also opposing the deal are the Texas regulators – the Texas State Securities Board and the Texas Department of Banking – both having concerns about the amount Voyager creditors would receive in the deal. In the hearing, Voyager’s attorney Christine Okike told the hearing that customers could get 73% of the value of their deposit.
The amount would be lower for unsecured creditors and could drop from 51% to 24% the value of their assets if Voyager does not win a pending case against Alameda Research, which sued the former seeking to recover $446m in loan repayments. A bid by FTX to acquire the assets of Voyager failed when the exchange collapsed in November last year.
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