US Judge Condemns SEC for Objecting to Voyager Digital’s Deal with Binance

A US judge has countered the action by the SEC to oppose the deal between crypto lender Voyager Digital and crypto company Binance. In December 2022, Voyager announced that it had selected Binance.US as the best and highest bid for its assets. The deal is worth $1.022 billion and is set to help the crypto lender’s customers access their funds as soon as possible. Under the agreement, the US arm of the crypto exchange was to make a good faith deposit of $10 million while it reimbursed Voyager for specific expenses up to $15 million. After then, all of the lender’s assets and customers will be transferred to Binance. However, the deal’s success is subject to approvals from a Bankruptcy Court, the SEC, and the Committee on Foreign Investment in the United States (CFIUS).

Voyager’s challenges started in July 2022 due to its exposure to the now-defunct hedge fund Three Arrows Capital. It initially suspended withdrawals before filing bankruptcy as a result of liquidity issues. Last week, a representative attorney for Voyager Digital said plans to conclude the deal with Binance were on track. According to the lawyers, 97% of the vote of the case is in favor, which means that the bid may eventually be successful. Still, the SEC has a firm grip on the agreement between Voyager and Binance, noting:

“The transactions in crypto assets necessary to effectuate the rebalancing, the re-distribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Acts of 1993 against the unregistered offer, sale, or delivery after the 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.”

US Judge Questions SEC for Going Against Voyager Deal with Binance

According to court filings, the SEC raised concerns about Voyager Digital and Binance. It stated that the crypto lender cannot prove that the deal with Binance or other crypto transactions complies with US Securities law.

While the bid for Binance to buy Voyager faces hindrances, the latest update is the judge’s reaction to the SEC casting vague doubts about the proposed sale. Judge Michael Wiles said on Thursday that the Commission has requested to suspend the bid without precise explanations.

In addition, the SEC lawyer William Uptegrove did not give definite information on whether the Commission believes the sale violated US securities laws. Rather he replied:

“We can’t take a position at this point. The SEC is a deliberative body, and it’s process is a nonpublic one by federal law.”

The judge, however, seemed dissatisfied with Uptegrove’s response. He insisted that the lawyer give specific information “if there are reasons to be concerned.”