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Binance Rekt by SEC Again as $1B Voyager Deal Opposed

The SEC is tightening its noose on Binance as it raises concerns about its Voyager Digital acquisition.

Image credit: Pablo Rebolledo on Unsplash

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Binance has once again felt the wrath of the US Securities and Exchange Commission (SEC), which has opposed its $1 billion deal to purchase Voyager Digital's assets.

On Wednesday, the SEC said in a filing that the deal could violate laws and might be discriminatory.

The SEC was particularly concerned about how Binance plans to repay Voyager’s former customers.

Voyager Digital declared bankruptcy in June, citing heavy exposure to 3AC.

Binance had planned to acquire Voyager Digital’s assets with an offer of US$1.022 billion. The bid was 27% lower than FTX‘s bid, which came in at US$1.4 billion before the exchange collapsed.

Read more: Binance to Buy Voyager Digital’s Assets at Discount From FTX’s Offer

“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,” the SEC's filing said.

Assets at Binance.US were also highlighted by the SEC who claimed the deal failed to provide enough information on whether "third parties including Binance.US affiliates or foreign persons or entities" could have access to customers' digital wallet keys.

The SEC was also concerned that the deal did not list safeguards "to ensure that customer assets are not transferred off the Binance.US platform."

New York's top financial regulator and New York Attorney General Letitia James also objected the deal, stating that Voyager "illegally operated a virtual currency business within the state without a license."

Binance responded on Thursday in a statement saying it would "work with relevant parties to provide any requested information, as Binance.US customer assets always remain on the platform, are held on a 1:1 basis and are fully reserved."

Binance vs SEC

Binance has been under the SEC's microscope as of recent. Just last week, the crypto exchange made headlines this week for moving over $400 million to a trading firm managed by co-founder and CEO Changpeng Zhao.

Records show that between January and March 2021, $400 million was moved from Binance.US to Merit Peak Ltd. The Binance.US account was registered under the name of BAM Trading. Company messages show transfers to Merit Peak started in 2020.

The SEC launched an investigation surrounding Binance.US and the same trading firm in February 2022.

A Binance.US spokesperson said Merit Peak was “neither trading nor providing any kind of services on the Binance.US platform." Yet, Binance is preparing to pay penalties to "make amends" for regulatory violations.

Furthermore, the SEC recently declared that crypto staking services violate security laws. The body consequently said it planned to sue BUSD issuer Paxos for violating investor protection laws.

Read more: Paxos Told to Stop Issuing BUSD, Binance Says Funds "SAFU"

The SEC's enforcement staff issued a Wells notice to Paxos, which the financial watchdog uses to inform companies and individuals of possible enforcement action.

The New York Department of Financial Services (NYDFS) ordered Paxos to stop issuing BUSD due to "unresolved issues."

As of Tuesday, Paxos declared that it has since terminated its relationship with Binance as it engages in talks with the SEC, although it claims the two are unrelated.

Read more: Paxos Ends Binance Relationship, Holds Talks With SEC