SEC Intervenes in Binance’s US Bid to Buy Bankrupt Crypto Lender’s Assets

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The Securities and Exchange Commission has intervened in a deal that would see Binance US buy the assets of a bankrupt crypto lender, a sign of how US authorities are stepping up their scrutiny of the digital asset exchange.

The Wall Street regulator has filed an objection to Binance US’ proposed acquisition of assets from Voyager Digital for $1 billion, which went bankrupt last summer as a sharp drop in token prices caused the collapse of several once prominent crypto companies.

Binance, the world’s largest digital asset exchange, and its global affiliates have come under increasing scrutiny among crypto investors and regulators after the collapse last year of FTX, which consolidated the leading role of crypto empires in the industry.

The SEC’s objection to the Binance US deal comes as the collapse of FTX raises concerns about opaque relationships between related crypto entities. Binance says its US subsidiary licenses its exchange technology, but maintains that they are independent companies.

The crypto industry has endured a tumultuous 12 months, capped in November by the failure of marquee exchange FTX. The SEC’s objection to Binance US’ proposed deal with Voyager shows how authorities are stepping up oversight of the industry even as many industry-leading assets remain unregulated.

The SEC said there was not enough information to show how Binance US would complete a transaction of this magnitude. The regulator also noted a lack of detail about the nature of Binance US’ business operations after the proposed acquisition, as well as how debtors intended to secure client assets. The SEC said it expects Binance US attorney to file an updated disclosure. Binance US did not immediately respond to a request for comment.

In a sign of growing pressure on the crypto industry in recent weeks, outflows from major global exchange Binance hit $6 billion in a matter of days last month. Binance CEO Changpeng Zhao sought to reassure customers, saying there were no withdrawal amounts that would put [Binance] under pressure.

Accounting firm Mazars, which previously produced proof of reserve reports for Binance, also said it would suspend its crypto business due to how such reports are understood by the public.

Industry players are also closely monitoring the situation with crypto broker Genesis, which halted withdrawals in its lending unit in November. He said this week that he needed more time to find a solution to his financial difficulties.

The group owes customers of the Gemini stock exchange, which used Genesis as a partner in its loan program, some $900 million. Gemini co-founder Cameron Winklevoss accused Barry Silbert, chief executive of Genesis parent company Digital Currency Group, of bad faith stalling tactics in an open letter on Monday. In response, Silbert said DCG sought to contact Gemini in late December but received no response.

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