SEC Raises Concerns Over Binance.US’s Acquisition of Voyager Digital Assets
On March 2nd, a hearing was held regarding the proposed acquisition of Voyager Digital, a cryptocurrency investment platform in bankruptcy proceedings, by Binance.US, a cryptocurrency exchange based in the United States.
A lawyer for the U.S. Securities and Exchange Commission (SEC), which has raised objections to the deal, pointed out that Binance.US could be considered an “unregistered securities exchange.” Additionally, the lawyer suggested that Voyager’s past sale of VGX tokens may have violated federal securities laws.
However, Judge Michael Wiles expressed skepticism about the SEC’s claims, stating that they lacked specificity. Voyager Digital filed for Chapter 11 bankruptcy in July 2022, and Binance.US won the bid to purchase Voyager’s assets for approximately ¥140 billion ($1.02 billion) in December 2022. The SEC has since contested the transaction.
During the hearing held at the Southern District of New York bankruptcy court, the focus was on the SEC’s objections to the Binance.US acquisition of Voyager. William Uptegrove, a senior trial counsel for the SEC, stated the following:
“Based on the facts and circumstances currently known, SEC staff believes that the offering and sale of VGX tokens involved securities transactions. SEC staff also believes that Binance.US operates an unregistered securities exchange in the United States.”
Uptegrove’s remarks were made on behalf of the SEC staff, and did not reflect the views of the SEC’s five commissioners (one chairman and four commissioners). Furthermore, Uptegrove added that the SEC had not made any determination regarding enforcement action related to the matters discussed.
Meanwhile, Judge Michael Wiles of the federal bankruptcy court stated that the SEC had not provided detailed evidence to support its objections to the Voyager acquisition deal. He also expressed doubt about the SEC lawyer’s view that VGX tokens could be considered unregistered securities.
Christine Okike, Voyager’s lawyer, argued in the same hearing that “the objections raised against the asset purchase agreement were strange since they could potentially disrupt the entire deal, despite the absence of concrete evidence.”
Uptegrove argued that the SEC believes that “creditors were not adequately warned about regulatory risks” as evidence that VGX tokens were securities. The SEC is also investigating Voyager’s marketing practices for potential exaggerations.
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