U.S. DOJ Trying to Block Binance’s Acquisition of Voyager Assets

• A day after getting the green light to buy Voyager’s assets, Binance faces more regulatory resistance.
• Judges and Creditors are on the side of Binance as they want to wrap things up quickly.
• If the deal is blocked, it won’t only be Binance and Voyager that lose out.

Binance is not very popular in the U.S. as recent leaks suggest that Binance.US., purportedly a separate entity to the global exchange, is more connected than previously thought. Due to these revelations, the SEC is on high alert as the Department of Justice (DOJ) steps in. 

The DOJ filed an appeal on Thursday, 9 March, challenging a decision to allow Binance U.S.’s plan to acquire the assets of the bankrupt crypto lender Voyager.

Binance.US was cleared to purchase the assets in a billion-dollar deal just a day before the DOJ appeal when Judge Michael Wiles approved it after a contentious, four-day-long hearing.

During the hearing, the SEC brought forward multiple objections, the major being that  Binance.US may be running as an unregistered securities exchange. 

Judge Wiles brushed the objection aside, stating the Bankruptcy Code “doesn’t contemplate an endless period of time.” –indicating he wanted to move things along so creditors could be paid. 

Opposing the Appeal

The benefit of Binance.US purchasing Voyager’s assets is that many of the wrongs from the collapse of the crypto lender can be made right. Judge Wiles seemed driven to wrap things up and look after the creditors. 

“Things have to be done. We have creditors who are waiting and who, in the midst of all of this uncertainty, have no access to property in which they’ve invested, in some cases, their life savings, so we have to take some kind of action,” Wiles said. “We have to do something.

The desire to give those burnt by Voyager’s collapse access to their assets is also at the heart of Voyager’s Official Committee of Unsecured Creditors. In a series of Tweets, the Committee said it would work with the Debtors to oppose any appeal against the deal.

Diminishing Returns for Voyager Investors

Should the current deal be scuppered by regulators, it would likely result in much smaller returns for creditors. Currently, under the proposed sale to Binance.US, customers would see an estimated 73% recovery of their funds.

However, if no sale is possible, the next option would likely be for Voyager to liquidate itself, resulting in much smaller returns for creditors. 

On the Flipside

• At first, Voyager planned to sell its assets to FTX after the lender went under. However, that deal collapsed when FTX went bankrupt itself in November last year. 

Why You Should Care

Should Binance.US be inextricably tied to the global exchange regulators in the U.S. would have a lot of ammunition to prosecute the world’s largest exchange.

Read more about the leaks that suggest Binance and Binance.US are closely tied:
Binance Leaks Spell Trouble with SEC, ‘Nuclear Fallout’

How the CFTC and the SEC disagree about classifying crypto coins:
CFTC Opposes SEC’s Crypto Position: Calls ETH and Stablecoins Commodities.