The acquisition of Voyager Digital leads Binance.US to more regulatory scrutiny, and possible review by US regulators.
In a filing sent to the court, the United States Securities and Exchange Commission (SEC) has raised objections to Binance’s acquisition deal with the bankrupt crypto firm Voyager Digital.
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Binance Keeps Getting Bigger
According to the filing, the agency questions Binance.US’s financial capability to handle the deal. Particularly, SEC is looking into how the exchange will protect customers’ funds and restructure the company.
The SEC and Voyager attorneys have reportedly been in contact with the issues, and details will be revealed during the upcoming hearing. At a hearing today, January 5, the court will also review Voyager’s asset sale.
Binance could face further headaches as the deal, which was confirmed in mid-December, has also attracted opposition from the Texas State Securities Commission and the Texas Banking Division.
The agencies argue that Voyager and Binance.US violated Texas law and are not authorized to conduct transactions here.
The news added more negative news to the world’s top exchange. Voyager’s VGX token price, on the other hand, has not been influenced too much by the news.
In the past 24 hours, VGX has increased by nearly 3% and is currently trading around the $0.316 mark.
The cryptocurrency broker Voyager Digital filed for bankruptcy following its suspension of withdrawals, deposits, and trades in July 2022. It was estimated that the company’s debts were around $10 billion.
Under the bankruptcy protection filing, the company’s estimated assets range from $1 to $10 billion. The number of creditors is expected to exceed 100,000 individuals and organizations.
Prior to the event, Voyager announced that hedge fund Three Arrows Capital (3AC) failed to repay a $650 million loan in the form of 15,250 Bitcoin and $350 million USDC stablecoin. 3AC itself filed for bankruptcy not long ago.
Industry Consolidation
FTX, Binance.US, and Wave Financial made an offer to acquire Voyager Digital. FTX initially reached the acquisition deal.
Unfortunately, the company filed for bankruptcy after a series of exposures by the end of last year and Binance eventually acquired Voyager in a deal valued at $1 billion.
Due to the bankruptcy of Voyager Digital, thousands of users at this company were forced to freeze their investments and get into debt.
Even if they are not in default or bankruptcy, many other cryptocurrency companies reflect a stressed situation when they continually lay off workers.
Last year, Coinbase, Gemini, BitMEX, and, most recently, Silvergate laid off employees to pay off debts and recover from a financial crisis.
Silvergate Bank slashed up to 40% of its workforce and liquidated assets in the aftermath of FTX to control expenses and cope with uncertain market circumstances.
Despite rising signs that regulators are targeting Binance, the company’s CEO, Changpeng Zhao, stated in October last year that Binance welcomes regulatory scrutiny and that Binance supports its anti-money laundering program.
However, Binance refuses to release information about its finances and organizational structure from regulators.
Existing Issues
Binance was sued last year for violating US securities laws by selling unregistered securities and not being licensed as an exchange or broker-dealer in this nation.
Binance, in fact, has a murky corporate structure, with a parent company based in the Cayman Islands. Binance’s founder and CEO, Changpeng Zhao, indicated in October that the company intends to open multiple headquarters” throughout the world.
In response to Reuters’ claims that Binance.US is a “de facto subsidiary” established to fortify Binance from U.S. regulations, CZ argued that Binance.US and Binance exchange are separate entities.
Binance previously saw a significant surge of withdrawals as many investors began questioning the company’s procedures. Binance is also facing a crisis of confidence following the crash of the FTX exchange.
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