- Over 97% of Voyager customers approved of the Binance US takeover bid.
- US regulators claim the deal leaves Voyager execs off the hook and may be illegal.
- Users are better off just selling Voyager’s assets, regulators suggest.
- Despite the deal, Voyager is still dumping millions of its assets.
After a vote by Voyager users, Binance’s bid to bail out the bankrupt crypto brokerage is one step closer to realization. However, the deal will likely face stiff regulatory opposition.
Multiple US regulators object to the deal, citing unfavorable terms for creditors. They also suggest that the deal leaves Voyager execs off the hook for the millions in customer losses.
Users of Voyager Digital voted overwhelmingly in favor of the company’s plan to sell its assets to Binance US. Over 97% of Voyager customers that participated in voting approved the $1 billion deal between Voyager and Binance’s US affiliate.
According to a Tuesday court filing by the restructuring firm Stretto, over 59,000 voters participated in the vote. These users represented over $550 million in claims against the brokerage. 2,117 users rejected the deal.
Regulators Object to Binance US Takeover
According to Voyager, the Binance bid will allow customers to regain 51% of the assets locked in the exchange. However, US regulators disagree and object to the deal.
Texas regulators claim that Voyager did not adequately report their liabilities. On Friday, the Texas State Securities Board and the Texas Department of Banking filed a joint objection to the deal. In particular, Alameda Research has a $445 million loan against Voyager.
That loan could significantly impact what Voyager customers can expect to get from the deal.
“If Alameda is successful in proving its administrative expense claim … recovery could be decreased from 51% to 24%-26% – an amount much lower than what the general unsecured claimants are estimated to receive in a Chapter 7 liquidation,” Texas regulators said.
US Securities and Exchange Commission (SEC) also raised objections to the deal on legal grounds. The SEC’s Feb 22 filing said the plan does not include disclosures about the Binance US platform. According to the regulators, disclosures may reveal that the plan violates legislation against unlicensed securities offerings.
The deal may also leave Voyager execs off the hook, says the Federal Trade Commission (FTC) in its objection. According to the FTC, the deal would preclude creditors from seeking relief outside the Binance plan. Users could not seek damages from Voyager employees, exempting them from liability.
Voyager Dumps Millions in Crypto Holdings
On the whole, regulators suggest that users may be better off just selling Voyager’s assets. This is exactly what the company has been doing so far, and fast. The company transferred around $121 million in crypto assets to exchanges in February. The bankrupt company also received about $150 million in USDC stablecoins.
Voyager’s dumping of its assets has harmed the prices of the assets it is selling, particularly for ETH and SHIB. Arkham Intelligence data shows that Voyager’s largest non-stablecoin holdings are 166,223 ETH worth $271 million and 6.2 trillion SHIB tokens worth $77 million.
On the Flipside
- US financial regulators do not have the best reputation among crypto traders, especially after the SEC’s crypto crackdown. This may be why regulator warnings might go unheeded.
- The deal may still fall through despite a favorable vote due to regulatory objections.
Why You Should Care
56,000 Voyager customers have more than $550 million in claims against the exchange. Their losses may further shake the confidence in crypto and invite stricter regulations.
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