Binance.US Withdraws from Acquisition Deal Amidst Regulatory Uncertainty

Binance.US, the American arm of cryptocurrency exchange Binance, has announced its decision to withdraw from the $1.3 billion deal to acquire bankrupt crypto lender Voyager Digital.

The move comes as Binance.US cites the “hostile” and unpredictable regulatory environment in the United States as the primary reason for terminating the asset purchase agreement.

In a tweet posted on Tuesday, Binance.US revealed that it had exercised its right to terminate the deal with Voyager, expressing disappointment over the regulatory climate.

https://t.co/AZwoBOgsqS has made the difficult decision to exercise its right to terminate the asset purchase agreement with Voyager.

While our hope throughout this process was to help Voyager's customers access their crypto in kind, the hostile and uncertain regulatory climate…

— Binance.US 🇺🇸 (@BinanceUS) April 25, 2023

The tweet read:

“While our initial intention was to facilitate Voyager’s customers in accessing their cryptocurrencies seamlessly, the challenging and uncertain regulatory landscape in the United States has introduced an unpredictable operating environment affecting the entire American business community.”

Shortly after Binance.US’s announcement, Voyager Digital, the bankrupt crypto lender, confirmed the termination of the asset purchase agreement in a separate Twitter thread.

1/ Today we received a letter from https://t.co/yG7Airmib5 terminating the asset purchase agreement. While this development is disappointing, our chapter 11 plan allows for direct distribution of cash and crypto to customers (a “toggle option”) via the Voyager platform.

— Voyager (@investvoyager) April 25, 2023

Voyager stated that it had received a letter from Binance.US regarding the decision. Despite the setback, Voyager assured its customers that its Chapter 11 plan would enable direct cash and crypto distributions through the Voyager platform.

Voyager emphasized its commitment to returning value to its customers. The company pledged to provide customers with updates on the next steps and actions in the coming days.

Binance.US’s offer, initially proposed in December, valued Voyager at $1 billion. The actual cash payment amounted to around $20 million, in addition to repayments owed to Voyager’s customers. If the deal had been finalized, estimates suggest that Voyager users could have recovered 73% of their deposit value.

There was speculation surrounding the deal’s termination, which surfaced on Twitter. The speculation linked it to an upcoming settlement between Binance and the Commodity Futures Trading Commission (CFTC).

The CFTC had filed a lawsuit against Binance’s parent exchange, accusing it of selling unregistered crypto derivative products. Binance CEO Changpeng Zhao simply posted a shrugging emoji in response to the speculation.

Inb4 Binance pulling out of the Voyager deal is part of the conditions of an imminent settlement with the CFTC.

CFTC commissioner today: There is not an immediate path forward. That doesn’t mean there couldn’t be one and hopefully there will be one.https://t.co/jk90VcGsPa pic.twitter.com/2DOiIL2NjI

— Hsaka (@HsakaTrades) April 25, 2023

US Regulators Attempted to Block Deal Despite Court Approval

The Securities and Exchange Commission (SEC) and the financial regulator in New York attempted to prevent the deal. However, the US government recently approved Binance.US’s acquisition of the remaining assets of Voyager Digital.

The SEC voiced concerns that the Voyager deal might violate laws about the unregistered offer and sale of securities. The agency also noted that rebalancing transactions involving cryptocurrency assets “may violate the restriction under Section 5 of the Securities Act of 1933 prohibiting the unregistered offer, sale, or delivery after the sale of securities.”

New York Attorney General Letitia James and New York’s top financial regulator objected to the deal. They asserted that Voyager had been operating a digital currency business within the state without a proper license.

Voyager Digital, a cryptocurrency broker, filed for Chapter 11 Bankruptcy in July, triggering a bidding war between Binance and the FTX exchange.

FTX initially obtained approval from a US bankruptcy court to acquire Voyager’s assets. However, FTX faced a collapse shortly after that, which led to Binance’s reentry into the acquisition process.

Binance.US withdrew from the Voyager deal, but the cryptocurrency community still awaits further developments in the regulatory landscape. As the industry continues to navigate the intricacies of compliance in the United States, there is anticipation for more updates.

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