In Spite Of An SEC Warning, Binance US Is Cleared To Buy Voyager Accounts‍

Despite warnings that Binance.US may face regulatory action in the future, Binance Inc.'s American affiliate was approved by a court to assume thousands of customer accounts from the bankrupt crypto platform Voyager Digital Ltd.

‍

U.S. Bankruptcy Court Judge Michael Wiles approved the deal between the two companies last Friday, undeterred by the disclosure last Friday that the Securities and Exchange Commission's staff had determined Binance.US is an unregistered securities exchange that is operating as part of its American affiliate of the world's largest crypto exchange.

‍

There has been no affirmation of the SEC staff's opinion that Binance operates an unregistered exchange in the U.S. by the agency's commissioners, but there are indications that the SEC could take enforcement action against the company. As Judge Wiles said in his ruling on Tuesday, he could not delay the deal between Voyager and Binance.US simply because the SEC is warning about possible enforcement in the future, especially since the agency did not provide any evidence that the companies could counter.

‍

“There is no explanation provided by the SEC as to why they claim Binance.US is operating as a securities broker. It is unlikely that we would be able to resolve the issue if we attempted to do so," Judge Wiles said in his ruling.

‍

Voyager now has the opportunity to transfer roughly $1 billion in cryptocurrency it holds to Binance.US, where customers will receive new accounts to access some of the assets frozen since Voyager filed for bankruptcy last year.

‍

It has been more than a week since Judge Wiles began hearings in front of the bankruptcy court regarding Voyager's plan to sell its customer accounts to Binance.US, wind up the bankruptcy case, and distribute what is left of the business to its customers. There have been doubts expressed by state and federal regulators about the viability of the proposed deal, citing the risk that Binance.US is under investigation by federal and state regulators.

‍

Neither the SEC nor Judge Wiles provided any evidence that Binance.US' sale or any other activity would violate securities laws or explain why they might.

‍

There was no affirmative contention on the part of the SEC that “[Voyager] was engaging in criminal behavior, nor that Binance.US was engaging in criminal behavior,” Judge Wiles commented.

‍

A majority of Voyager customers voted in favor of the deal, with 97% in favor. If they choose not to transfer their assets to Binance.US, the customers may choose to receive their funds back in cash. It has been estimated that under Voyager's chapter 11 plan, its investment banker testified that after the bankruptcy the company would be able to recover 70 cents on the dollar for its customers.

‍

As a representative of Binance.US made clear Tuesday, “it is pleased that the bankruptcy court has agreed with 97% of Voyager customers who voted that our plan provides the best path forward for Voyager users to reclaim their assets and take control of their financial life again.”

‍

Binance, one of the world's leading exchanges, is currently being investigated by the U.S. Department of Justice and regulatory authorities and is expecting to pay a fine. Trade Algo has reported that the Securities and Exchange Commission has opened an investigation into Binance.US's trading practices, including whether the company adequately disclosed conflicts of interest to its customers to the SEC.

‍

Binance and Binance.US have been more intertwined than the companies have disclosed, according to Trade Algo.

‍

In court, Voyager's investment banker was questioned about how it ensured that its customers' assets were safe with Binance.US and wouldn't be used for the types of risky investments that have caused other crypto platforms to fail. However, Wiles, in his ruling, said that he did not have any evidence that Binance.US was at risk of going out of business.