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Binance Abandons $1 Billion Voyager Deal, Blames Challenging US Regulations

Binance Changpeng Zhao

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Ruholamin Haqshanas

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October 23, 2023 07:05 EDT

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Binance.US has pulled out of the $1.3 billion deal to buy bankrupt crypto lender Voyager Digital, citing a “hostile” regulatory climate in the United States.

In a Tuesday tweet, the US arm of cryptocurrency exchange Binance revealed that it has exercised its right to terminate the asset purchase agreement with Voyager. It added:

“While our hope throughout this process was to help Voyager’s customers access their crypto in kind, the hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community.”

https://t.co/AZwoBOgsqS has made the difficult decision to exercise its right to terminate the asset purchase agreement with Voyager.

While our hope throughout this process was to help Voyager's customers access their crypto in kind, the hostile and uncertain regulatory climate…
— Binance.US 🇺🇸 (@BinanceUS) April 25, 2023

In a separate Twitter thread, Bankrupt crypto lender Voyager Digital announced that it has received a letter from Binance.US, terminating the asset purchase deal.

“While this development is disappointing, our Chapter 11 plan allows for direct distribution of cash and crypto to customers via the Voyager platform,” the company added.

Voyager noted that it would proceed with direct distributions in a bid to return value to customers. The crypto lender said it would provide more information on the next steps and any actions customers need to take in the coming days.

Binance.US’ offer, originally made in December, would value Voyager at $1 billion, although the actual cash price that Binance.US needs to pay is just around $20 million, in addition to repayments to Voyager’s customers.

As per estimates, Voyager users could have recovered 73% of the value of their deposits if the deal had been finalized.

Meanwhile, some Twitter users speculated that the abandonment of the deal was linked to an upcoming settlement with the Commodity Futures Trading Commission, which has sued parent exchange Binance over selling unregistered crypto derivative products.

Chief Executive Officer Changpeng Zhao has responded to the speculation with an emoji of a shrugging figure.

🤷‍♂️
— CZ 🔶 BNB (@cz_binance) April 25, 2023

US Regulators Attempted to Halt the Deal Despite Greenlight from Court

Notably, last week, the US federal government approved the bid by the exchange to buy up the remaining assets of the bankrupt crypto lender Voyager Digital.

The green light from the federal government came after the US regulators, including the Securities and Exchange Commission (SEC) and New York’s financial regulator, previously attempted to halt the deal.

At the time, the SEC said the Voyager deal might violate laws on the unregistered offer and sale of securities.

More specifically, the agency said the transactions in crypto assets necessary to effectuate the rebalancing “may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after sale of securities.”

Similarly, New York’s top financial regulator and New York Attorney General Letitia James objected to the deal, saying that Voyager “illegally operated a virtual currency business within the state without a license.”

Voyager was a cryptocurrency broker that filed for Chapter 11 Bankruptcy in July, which was followed by a bidding war between Binance and the FTX exchange.

At the end of October, FTX secured the approval of a US bankruptcy court to take over Voyager’s assets, but it infamously collapsed soon after, and Binance was back in the game.