Binance has been opposed by the Securities and Exchange Commission (SEC) of the United States. On February 22, United States law enforcement seized roughly $1 billion in assets from the insolvent cryptocurrency loan company Voyager Digital, saying it was discriminatory and unlawful. They launched a formal inquiry into potential violations of anti-fraud, registration, and other federal securities laws.
According to the SEC, the information provided in the proposed acquisition of Voyager assets did not clearly disclose whether Binance.US or connected third parties would have access to customer wallet keys or control over anybody who had such access. Furthermore, the SEC claims that Binance.US has not declared internal controls and policies to ensure the protection of consumer assets.
The remarks from bankruptcy judge Michael Wiles came on the third day of proceedings on Voyager’s proposal to develop a repayment token and sell $1 billion in assets to Binance. US. The US Securities and Exchange Commission (SEC) will not be able to penalize officials involved in Voyager Digital if the company decides to issue bankruptcy tokens to assist reimburse affected consumers.
Without specific safeguards in place for individuals involved in Voyager’s restructuring plan, which involves transferring troubled assets to Binance US, “a sword would hang over the heads of anybody who is going to do this transaction,” Judge Michael Wiles stated during the hearing.
In bankruptcy proceedings, it is common for restructuring plans to contain certain legal safeguards for firm advisers and executives. Essentially, this implies that executives and restructuring experts participating in Voyager’s bankruptcy would be immune from litigation if the bankruptcy plan was granted by the court. Nevertheless, such safeguards must be specifically stated in a disclosure statement, which is where the SEC has taken issue.
It also objected to a legal safeguard that said that no US agency, including the SEC, will be allowed to initiate “any lawsuit against any Person on account of or pertaining to the Restructuring Transactions” in a supplemental objection statement. The SEC previously claimed that the repayment token would be an unregistered security offering, despite the fact that Binance.US operates an unregulated securities market.
However, Texas securities and banking authorities have criticised Voyager for not being more diligent in informing unsecured creditors that their payoff might reduce from an estimated 51% to 24% of the value of their assets if the business loses its case against Alameda Research. Texas regulators have also drawn attention to Binance US’s Terms of Service, which ask customers to acknowledge that “Binance.US relies on Binance.com and other ‘Related Parties’ to provide services to Binance US,” Texas Attorney General Abigail Ryan wrote in a February court filing, arguing that not all jurisdictions where customer data could be shared maintain the same financial data protections as the United States.
Nevertheless, SEC lawyer Therese Scheuer contended that the legal safeguards are so wide that Voyager workers and attorneys would be permitted to violate securities laws. According to Bloomberg, after much deliberation, Voyager’s attorneys decided to limit the extent of legal disclosures. On July 5, the trading platform filed for bankruptcy in an attempt to reorganise the company and restore value to over 100,000 customers. The court is evaluating a reorganisation proposal to get Voyager out of Chapter 11 bankruptcy, which was initially reported on December 19.
