Binance.US withdrew its $1 billion offer to purchase cryptocurrency assets frozen as part of the Voyager Digital Holdings bankruptcy, citing a “hostile and uncertain regulatory climate in the United States.”
Voyager announced the termination of the deal on Twitter on Tuesday afternoon, New York time, and said the company will seek to directly compensate investors whose assets have been frozen since July, using a “toggle option” in the company’s bankruptcy plan.
The termination was confirmed by Zachary Tindall of Binance.US in an emailed statement that blamed regulators for having “introduced an unpredictable operating environment impacting the entire American business community.”
There has been a spate of U.S. actions this year against digital-assets businesses by various agencies, and Binance was charged by the Commodities Futures Trading Commission (CFTC) in March with offering crypto derivatives without registering as a futures commodity merchant. In a blog post at the time, Changpeng Zhao, the founder and CEO of the Binance parent company—who was named in the CFTC action—said “the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged.”
The Binance statement on Tuesday did not directly address the CFTC complaint, nor attempts by the SEC and New York State to derail the asset purchase.
Voyager, a brokerage that failed in July, part of a string of crypto-related defaults, had a previous deal to sell its assets to FTX US, an arm of the Bahamas-based digital-assets empire that filed for bankruptcy in November. FTX had offered to reimburse much of the frozen assets in exchange for the chance to sign investors on as new customers. The similar Binance plan involved a $20 million payment to the Voyager bankruptcy estate and a payment of about $1 billion for the frozen funds. Binance was also seeking to add clients by purchasing the crypto, which would have been returned to the Voyager customers.
The U.S. SEC previously opposed the Binance transaction because Voyager’s restructuring plan did not include “necessary information regarding the safety of assets” and that the company failed to demonstrate that a provision to return frozen funds to investors could be done “in compliance with the federal securities laws.” The agency also said that Voyager “did not “sufficiently explain what safeguards have been established to ensure that customer assets are not transferred off the Binance.US platform.”
In a separate objection, the New York Department of Financial Services alleged that Voyager signed up customers in New York and “thus illegally operated a virtual currency business in the state without a license.”
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