Binance.US announced in a Twitter post that it is pulling out of the deal to acquire the collapsed crypto company Voyager Digital. The biggest crypto exchange stated that it is just exercising its rights to terminate the asset purchase agreement with Voyager. Binance further explained that its decision was influenced by the hostile and uncertain regulatory environment in the United States.
A US Bankruptcy Court approved Binance’s $1.3 billion deal to acquire the assets of Voyager, a failed cryptocurrency platform. The deal was supposed to allow Binance to expand its customer base in the U.S. market. Unfortunately, the crypto space has been besieged by hostile regulations, thus making it hard for industry players to operate.
Binance Versus Regulators
Binance is facing several regulatory hurdles in the US, which is probably one of the major reasons for terminating the agreement with Voyager. The Commodity Futures Trading Commission (CFTC) has filed a complaint against the crypto platform and its executives. Binance has allegedly breached core provisions of the Commodity Exchange Act, which prevents and detects money laundering and terrorism financing. The crypto platform allegedly failed to apply “anti-fraud or anti-manipulation surveillance or controls” to 300 accounts.
The Securities and Exchange Commission (SEC) has also accused Binance of operating as an unregistered securities exchange. The stablecoin Binance USD or BUSD has also been under scrutiny. Its issuer Paxos has been served a Wells Notice for issuing BUSD, alleged unregistered security.
Binance is understandably having seconds taught in injecting more investments in the U.S. due to tightening regulations.
What Did Voyager Say?
Voyager Digital, which filed for Chapter 11 bankruptcy in July 2022 after failing to repay its creditors and customers, said it was “disappointed” by Binance.US’s decision and that it would seek to directly compensate its investors using a “toggle option” in its reorganization plan. The option allows Voyager to distribute cash and crypto to its customers instead of transferring its assets to Binance.US. Voyager has also asked Binance to destroy all customer information it has received from the deal.
Binance Exposed a Bigger Problem
Businesses thrive in suitable environments and it seems like the U.S. is driving away capital. Operating crypto and digital assets companies in the U.S. is increasing in difficulty. Regulators are targeting the crypto industry under the guise of consumer protection.
Members of Congress are also trying to figure out if financial regulators like the SEC are doing more harm than good in the exercise of their powers. Some representatives are recognizing that the SEC and its chairman are exercising vague regulatory overreach. This has led to a proposal to remove the SEC chairman position and replace it with an executive director who reports to the board. Even the Congress Majority Whip has noted that the SEC has pushed capital out of the country.
In the end, the deal that would have benefited Voyager customers was scuttled because of regulatory uncertainties. The regulations that should have protected them have backfired. Binance’s decision is a taste of what will happen if the country continues to be hostile to crypto and innovations.
Featured Image from Unsplash
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