SEC Accuses Binance.us Of Being An Unregistered Exchange• March 6, 2023 10:10 pm • Comments
A lawyer from the SEC just revealed that members of the agency believe that Binance.us is an unregistered securities exchange.
If the SEC decides to take legal action against Binance.us, this would have a negative impact on the exchange’s ability to continue to do business within the US.
This would also likely prevent the company’s plans to acquire the assets of Voyager Digital which was a firm that had gone bankrupt earlier due to the crypto winter.
The SEC had previously objected to this acquisition as it questioned how Binance.us was able to get the funds to do such a large acquisition.
Ultimately, it seems the SEC’s aggressive stance on crypto firms will likely encourage many firms to start to move abroad if this continues.
A federal bankruptcy judge said he was "absolutely shocked' by the SEC's objection to the Voyager-Binance US deal, saying the regulator has not provided much guidance to explain its concerns.@jackschickler reportshttps://t.co/xf5ERqaTJv
— CoinDesk (@CoinDesk) March 2, 2023
Previously, on March 2, the judge responsible for the case criticized the SEC’s objections to the deal. U.S. Bankruptcy Judge Michael Wiles said that the regulator had “stop[ped] everybody in their tracks” without providing a way to respond to its concerns.
At that time, Uptergrove refused to take a stance on whether the sale of Voyager’s assets violated securities laws. The judge insisted on a more specific answer.
In response to the increasingly complex situation, Binance CEO Changpeng Zhao floated the possibility of abandoning the deal on March 3. He wrote on Twitter: “maybe we should pull out?” He nevertheless expressed support for the deal if it is ultimately permitted.
Binance.US’s purchase of Voyager assets must be allowed by the SEC even if the deal is approved by all other parties — including the companies, creditors, and the judge.
Voyager customers voted overwhelmingly in favor of the plan on March 1.
Binance.us is considered a separate entity from Binance that operates specifically for the US market due to the US having its own strict regulations for crypto.
However, it seems that the SEC also believes that Binance.us is not a separate entity as it likely gets funds from the parent company Binance.
This may be a plan from the SEC to get Binance as a whole to register itself within the country which is something that many within the crypto community would oppose.
Whether or not the SEC will decide to take legal action on this claim that Binance.us is an unregulated exchange is still unknown.
Such a decision would effect more than just Binance, but also also many other crypto exchanges that currently operate within the country.
🚨SEC BLOCKS #BINANCE ACQUISITION OF VOYAGER DIGITAL🚨
So lemme get this straight, the SEC blocks a deal where creditors would see a 73% recovery rate, after 97% of customers voted in it’s favour…
& @GaryGensler wants you to believe he is trying to “protect investors” 🤔 pic.twitter.com/aiytiL6gph
— ™️🌐everythingcrypto.cro🌐™️ (@TheCRONOSking) March 3, 2023
Famous crypto promoter Ben Armstrong argued that it was not about Binance.US alone but every asset manager in the Web3 industry. A Twitter user with the username @SuperElonMars commented that the SEC and its chairman Gary Gensler aimed to change precedents outside the law.
Given that exchanges are not selling initial coin offerings, SuperElonMars cited the judge in the library case as saying secondary sales are not securities.
i’m sure exchanges aren’t selling initial coin offerings, and as the judge in the library case has stated secondary sales are not securities so the @SECGov and @GaryGensler are trying to change precedent outside of the lawthis is why the sec needs to go
— SuperElonMars (@SuperElonMars) March 4, 2023
In another conversation, crypto analyst Adam Cochran contended that the US regulator was playing a game of “brutal 4D chess” against Binance, the largest crypto exchange. The analyst believes that the SEC’s move was calculated and designed to force Binance to settle the matter or face the prospect of discovery by a US agency.
SEC staff have concluded that Binance US is operating an unregulated securities exchange. What do you think happens next?
— Mike Alfred (@mikealfred) March 4, 2023
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