SEC, Texas regulators voice concerns over Binance-Voyager deal

The US top regulator has filed a so-called “limited objection” to the proposed $1.02 billion acquisition, citing the lack of clarity on Binance.US’s ability to close the deal. As such, the SEC wants to get more information on the exchange’s source of funding and the nature of business operations following closure of the deal.

The SEC also wants to know how Binance.US intends to secure customer assets during and after the transaction and how it would rebalance its cryptocurrency portfolio.

In its filing, the SEC said it has already sent its inquiries to Binance.US’s counsel and expects to receive a revised disclosure statement prior to a hearing on the matter.

“The Debtors set forth general steps that they would take in the event the sales transaction is not consummated by the outside date, including: (i) selling such Cryptocurrency that cannot be distributed to Account Holders, (ii) purchasing Cryptocurrency supported by Voyager’s or Purchaser’s platform, and (iii) consummating any other transaction, including the execution of trades of Cryptocurrency, necessary or appropriate to effectuate. But more detail should be provided regarding the implementation of these steps. In addition, the Disclosure Statement should be revised to make clear that rebalancing will occur not just in a liquidation scenario but also in the context of a sale transaction,” the filing further states.

On the same day, state securities officials from Texas filed separate objections to the deal. The Texas State Securities Board and the Texas Department of Banking claim that the bankrupt crypto lender and its sole bidder are “not in compliance with Texas law and are not authorized to conduct business in Texas.”

The regulatory objections come amid reports suggesting that the US Committee on Foreign Investment (CFIUS), which reviews deals for potential national security risks, may challenge Binance’s bid to buy Voyager Digital.

According to the United States bankruptcy court filing, Binance’s $1 billion bid could be delayed or blocked while CFIUS analyzing the security risks associated with the takeover. The authority could make it more difficult for the exchange controlled by Chinese-born Changpeng Zhao to buy US assets.

Binance.US, the American arm of the world’s largest crypto exchange by volume, announced last month the acquisition of assets of Voyager for just over $1 billion.

Voyager said the takeover sets a clear path forward to unlock Voyager customer funds at a to-be-determined date in the future. The winning bidder will make a $10 million in “good faith deposit” and will reimburse Voyager for certain expenses up to a maximum of $15 million.

Binance.US has until April 18, 2023 to finalize the acquisition, otherwise Voyager will move these additional fees to customers after a one-month extension. Until then, Voyager will seek bankruptcy court approval for the deal at a hearing on January 5.