Plans of Binance Acquisition of Voyager in Full Swing

UTC by Bhushan Akolkar · 3 min read
Plans of Binance Acquisition of Voyager in Full Swing
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Crypto lender Voyager Digital announced bankruptcy last year in July.

On Wednesday, an attorney representing bankrupt crypto lender Voyager Digital stated that plans to wind up Binance.US’s $1.02 billion acquisition deal for Voyager are on track. Lawyers representing Voyager said that 97% of the votes so far have been in favor of the plans.

The deadline to vote in on or object to the plan shall close at 4:00 p.m. ET Wednesday, February 23. Allyson Smith of Kirikland & Ellis, representing Voyager, told bankruptcy judge Michael Wiles:

“As of last night, creditors are still overwhelmingly voting to accept the plan at 97%”.

With the intention to confirm the plan by March 2nd, Smith added: “We are on track and don’t anticipate any obstacles and expect to be before Your Honor again next Thursday”.

Crypto lender Voyager Digital announced bankruptcy last year in July. Although Voyager was working out a deal with crypto exchange FTX, the latter collapsed by November 2022. Later in December 2022, Binance.US jumped in with its sweeping offer.

SEC Objects to Binance.US’s Deal

The US Securities and Exchange Commission (SEC) has recently tightened its grip on the crypto firms and exchanges operating in the country. The SEC has also objected to the $1 billion acquisition deal of Voyager Digital by Binance US.

The SEC finds that certain elements of the Binance.US-Voyager deal might infringe on the law, depending on how the plan envisages repaying Voyager’s former customers. Citing the VGX token issued by voyager Digital, the SEC in its filing noted:

“The transactions in crypto assets necessary to effectuate the rebalancing, the redistribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after sale of securities. It is the Debtors’ burden to present credible evidence that the provisions of the Plan are feasible and not in violation of applicable law”.

Furthermore, the SEC cited different media reports that Binance.US is likely to pay penalties over allegations of money laundering and corruption. If this becomes evident, the deal could become “unfeasible” and “impossible to consummate”.

Not only the SEC but other regulators like New York State’s Department of Financial Services (NYDFS) and Attorney General Letitia James, are also opposing the deal. They argue that Voyager was unlawfully serving customers in the country. The charges from NYDFS notes that “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. Voyager “onboarded New York customers and thus illegally operated a virtual currency business within the state without a license, in violation of New York laws and regulations,” depriving its customers of protection.

Previously, Voyager has argued that the deal with Binance.US would be in the best interest of creditors. The crypto lender said that the allegations by NYDFS are “hypocritical” since the regulators themselves are limiting the ability to distribute crypto.

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