Elizabeth Warren Demands Answers From Binance CEO Changpeng Zhao Regarding Crypto Exchange Finances

March 6, 2023 The Daily Hodl

SEC objection to Voyager-Binance.US deal questioned by US judge

March 3, 2023 Coin Telegraph

A U.S. judge scolded the SEC over its non-specificity on its objection to Voyager’s restructuring deal and asked for specifics on its concerns.

The bankruptcy judge on Voyager Digital’s case has reportedly scolded the United States securities regulator over its ambiguous reasoning for objecting to the crypto lending firm’s proposed sale to Binance.US.

At a Mar. 2 hearing in a New York court, U.S. bankruptcy judge Michael Wiles said the Securities and Exchange Commission (SEC) had basically asked to “stop everybody in their tracks” without explaining how to address concerns it had over the deal according to a Reuters report.

The court was considering a restructuring plan announced on Dec. 19 last year to bring Voyager out of Chapter 11 bankruptcy that would see crypto exchange Binance.US acquire its assets for $1.02 billion — an option Voyager said at the time represented the “highest and best bid for its assets.”

The SEC however filed an objection to the sale on Feb. 22 claiming aspects of the restructuring plan could breach securities laws, namely the crypto transactions that will need to happen to rebalance funds to redistribute to Voyager account holders.

In court, SEC attorney William Uptegrove offered a reserved answer to Judge Wiles when asked if the regulator believes the plan violated the law, saying:

"We can't take a position at this point. The SEC is a deliberative body, and its process is a nonpublic one by federal law."

Wiles hit back saying "deliberative is one thing, but what have you done?" and added, "if there are reasons to be concerned here, I need to hear specifics."

⚠️ Judge Wiles slamming the SEC rep about their objection. ⚠️

Says, (paraphrase) "You're asking the debtor to prove that the cryptos being transacted are not securities, but you've given no regulatory guide as to what that is."
— VGX Heroes (@VGX_Heroes) March 2, 2023

The sale requires court approval, along with the go-ahead from the SEC and the Committee on Foreign Investment in the United States (CFIUS) which is probing the deal to review if it will entail a foreign investment and raise national security concerns.

Judge Wiles is set to hear continued arguments on the bankruptcy plan on Mar. 3.

The proposed Binance.US plan would transfer Voyager customers to the crypto exchange, who would be able to withdraw their funds for the first time since the platform filed for bankruptcy in July last year.

Customers would reportedly recover over 70% of their deposited value as at the time of the bankruptcy, in a poll of 61,300 account holders with claims against the crypto lender, the plan was favored by 97% of Voyager’s customers.

Binance US restructuring plan favored by 97% of Voyager customers

March 1, 2023 Coin Telegraph

Bankruptcy

An overwhelming majority of Voyager account holders want Binance US to buy out the firm’s assets.

A move by Binance US to acquire assets belonging to the bankrupt crypto lending firm Voyager Digital has been favored by 97% of Voyager’s customers.

A Feb. 28 court filing shows an overwhelming majority of Voyager Digital account holders are in favor of the buyout from the United States-based arm of the crypto exchange Binance.

Bankruptcy management firm Stretto conducted the balloting of Voyager customers which polled 61,300 account holders with claims against the embattled crypto lender.

Of that total, 59,183 voted in favor of the Binance US restructuring plan with just 3%, or 2,117 voters rejecting it.

*Account holder claims voting results: Source: Stretto*

The voters were divided into four classes including, account holder claims and three categories of those with “general unsecured claims.” The latter groups also voted in favor of the proposal.

In December, Binance US disclosed an agreement to buy Voyager’s assets for $1.02 billion. According to the press release at the time, the Binance US bid “aims to return crypto to customers in kind, in accordance with court-approved disbursements and platform capabilities.”

However, there has been a lot of pushback and numerous objections to the proposal by the American division of the world’s largest crypto exchange.

According to a Feb. 24 court filing, the Texas State Securities Board and the Department of Banking objected to the proposed deal.

It claimed the restructuring plan contain a number of “inadequate" disclosures. Some of these included not informing unsecured creditors that they may only get 24% to 26% recovery rather than the 51% they would receive under Chapter 7 bankruptcy.

The Securities and Exchange Commission (SEC) also objected to the move. A Feb. 22 court filing claimed the Binance US acquisition of Voyager assets could breach securities law.

On the same day, the Federal Trade Commission (FTC) started an investigation into Voyager Digital for its “deceptive and unfair marketing of cryptocurrency to the public.”

Binance.US Launches Full Support for Shiba Inu (SHIB) – Is Bone ShibaSwap (BONE) Next?

February 25, 2023 The Daily Hodl

SEC files objection to Binance US bid for Voyager assets

February 23, 2023 Coin Telegraph

Binance

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’ move to acquire over $1 billion of assets belonging to the defunct cryptocurrency lending firm Voyager Digital.

According to a Feb. 22 filing submitted to the U.S. Bankruptcy Court in the Southern District of New York, the SEC believes that certain elements of the asset restructuring plan of Binance.US’ acquisition could breach Securities Laws.

The SEC is formally investigating whether Binance.US and related debtors violated anti-fraud, registration and other provisions of the federal securities laws. The SEC noted particular concern around the security of assets through the planned acquisition.

The SEC argues information provided in the planned purchase of Voyager assets fails to adequately outline whether Binance.US or affiliated third parties will have access to customer wallet keys or control over anyone with access to such wallets.

Furthermore, the filing notes insufficient provision of safeguards to ensure that customer assets are not transferred off the Binance.US platform. The SEC also argues that Binance.US has not declared internal controls and practices ensuring the safety of customer assets.

The SEC is calling for Binance.US to address these issues by providing information regarding who has access to customer assets and the necessary controls after the deal is finalized.

The SEC is particularly focused on part of Binance.US’ initial plan and disclosure statement for its Voyager bid. The company will retain the right to sell cryptocurrencies belonging to Voyager to distribute to account holders, which is the main point of concern for the US regulator.

“However, the Debtors (Binance.US) have yet to demonstrate that they would be able to conduct such sales in compliance with the federal securities laws.”

According to the filing, various cryptocurrency transactions will need to take place to rebalance funds for redistribution to account holders, which the SEC believes may violate sections of its Securities Act.

The regulator argues that the disclosure statement provided by Binance.US and other debtors does not address the possibility of these transactions being unlawful. It’s believed that this possibility could impact the estimated 51% recovery of funds that will be paid out to account holders and claimants of Voyager.

A footnote of the filing highlights the potential of Voyager buying and selling certain digital assets to rebalance asset holdings. The SEC flags the potential sale of VGX tokens that are issued by Voyager, which ‘may constitute the unregistered offer or sale of securities under federal law’.

The SEC also notes that Binance.US could be acting as an exchange under existing Exchange Act laws, which it is prohibited to do without the necessary registration as a national securities exchange or exemption from doing so.

The filing highlights concerns over the lawfulness and overall ability to carry-out planned asset restructuring through the acquisition and questions whether Voyager debtors will be able to recoup some of their assets following the bankruptcy of the firm:

“Creditors and stakeholders are entitled to know whether this transaction provides them a meaningful economic benefit, or whether this is just a $20 million sale of Voyager’s customer list to Binance.US.”

As Cointelegraph previously reported, Binance is looking to remedy previous regulatory and law-enforcement investigations in the U.S. The firm is facing the possibility of fines relating to previous compliance issues.

Binance is also dealing with regulatory action towards Paxos, which is responsible for issuing Binance’s US Dollar backed BUSD stablecoin. The New York Department of Financial Services (NYDFS) ordered the firm to stop minting BUSD tokens from Feb. 21. Paxos has countered claims from the SEC that BUSD is a security, after receiving a Wells notice from the regulator for failing to register the token as a security in the U.S.

Binance.us