The SEC has moved to bar final approval of Binance.US’ $1 billion bid for assets belonging to bankrupt crypto lending firm Voyager Digital.
The United States Securities and Exchange Commission (SEC) has objected to Binance.US‘s decision to acquire more than $1 billion in assets from the first cryptocurrency lending company Voyager Digital.
As one Feb. 22 in a filing with the United States Bankruptcy Court for the Southern District of New York, the SEC believes that certain aspects of Binance.US’s asset recovery plan may violate securities laws.
The SEC is publicly investigating both Binance.US and related lawmakers for violating fraud, registration, and other provisions of federal securities laws. The SEC expressed particular concern about the protection of assets through organized purchases.
The SEC argued that the information provided in connection with Voyager’s proposed acquisition of assets does not clearly indicate whether Binance.US or other related parties will have access to customer wallet keys or control anyone. has access to wallet keys. In addition, the filing states that there is no sufficient agreement to ensure that customer assets are not transferred to the Binance.US platform. The SEC also argues that Binance.US failed to report internal controls and practices to ensure the safety of customer assets. The SEC is asking Binance.US to address these issues by providing information about who can access the client’s assets and the necessary controls after the deal is completed.
The SEC is focusing on aspects of Binance.US’s initial plan and disclosure statement for its Voyager offering. The company will retain the right to sell Voyager’s cryptocurrency for distribution to account holders, which is a major concern of US regulators.
According to the filing, the various transactions of cryptocurrency will be necessary to make the money change to be distributed to the account holders, which the SEC says may violate part of the Securities Act. The regulator argues that the declarations provided by Binance.US and other creditors do not disclose the possibility that these transactions are illegal. This opportunity is believed to have resulted in a 51% refund of the amount paid to Voyager account holders and claimants. A footnote in the filing details Voyager’s ability to buy and sell certain digital assets to adjust holdings. The SEC reports a possible sale of Voyager Token (VGX), issued by Voyager, which “may constitute an unregistered offering or sale of securities under federal law.”
The SEC also says that Binance.US can operate as an exchange under the current rules of the Exchange Act, which is prohibited from doing so without the necessary registration as a national security exchange or settlement. The filing highlighted concerns about the ability and sufficient capacity to fill the proposed asset restructuring and the question of whether Voyager’s creditors would be able to recover some of their assets after the company’s liquidation:
“Payers and buyers have the right to know if this transaction provides them with a significant economic benefit, or if it is just a $20 million sale of listings Voyager’s trading on Binance. US.”
As reported by Cointelegraph, Binance is seeking to amend the previous law enforcement investigation in the United States. The company faces the possibility of penalties related to past compliance issues.
Binance also has a legal relationship with Paxos, which is responsible for issuing Binance USD backed by US dollars BUSD ($1.00) stablecoin. The New York Department of Finance ordered the company to stop producing the BUSD token effective February 21. Paxos denied the SEC’s claim that BUSD was a security after receiving Wells’ notice from the regulator for not registering the symbol as a security in the United States.
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