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Binance.$1.02 US’s billion agreement to buy the assets of insolvent crypto lender Voyager has been blocked by New York and Federal financial regulators, who warned in Feb. 22 documents that it might be discriminatory and illegal.
The decision follows the Securities and Exchange Commission’s increased involvement in crypto, which recently forced crypto exchange Kraken to cease down crypto staking activities due to investigations into alleged sales of unregistered securities.
Parts of the proposed Binance.US-Voyager merger may potentially violate the law, according to the SEC, because of how the proposal envisions compensating Voyager’s former clients.
Furthermore, the SEC said in a filing that the transactions in crypto assets necessary to effectuate the rebalancing, the redistribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after sale of securities. It thereby cited the VGX token issued by Voyager in particular.
The SEC also said that it is the Debtors’ responsibility to show convincing evidence that the Plan’s provisions are viable and do not violate relevant law. In addition, the U.S. regulator highlighted media reports that Binance is preparing to pay fines for past violations of money laundering and corruption legislation as evidence that the transaction might become unfeasible and therefore difficult to conclude.