Several US regulators, including the Securities and Exchange Commission (SEC), have filed their objections to the proposed acquisition of Voyager by Binance.US.

As FX News Group has reported, in December 2022, Voyager selected Binance.US as the preferred bidder for its assets. The sale agreement follows Voyager’s July 5, 2022 filing for Chapter 11 bankruptcy.

The Debtors seek conditional approval of the Disclosure Statement in support of their chapter 11 plan as containing adequate information under Section 1125 of the Bankruptcy Code, and approval of an asset purchase agreement (APA) with BAM Trading Services Inc. d/b/a Binance.US (Binance US), which would be consummated pursuant to the Plan. However, according to the SEC, the Disclosure Statement and APA fail to include the following necessary information:

• The ability of Binance US to consummate a transaction of this magnitude, which the Debtors value at $1.022 billion, including the nature of Binance US’s business operations after the acquisition.
• Sufficient detail regarding how the Debtors intend to secure customer assets, including what if any safeguards will be implemented to protect against theft or loss by both the Debtors, during implementation of the plan process, and Binance US, after its acquisition of assets.
• Sufficient detail regarding the rebalancing of the Debtors’ cryptocurrency portfolio. The Debtors set forth general steps that they would take in the event the sales transaction is not consummated by the outside date, including: (i) selling such Cryptocurrency that cannot be distributed to Account Holders, (ii) purchasing Cryptocurrency supported by Voyager’s or Purchaser’s platform (as provided by the Asset Purchase Agreement) that shall be distributed to Account Holders, and (iii) consummating any other transaction, including the execution of trades of Cryptocurrency, necessary or appropriate to effectuate distributions of the Distributable Cryptocurrency to Holders of Allowed Account Holder Claims.

The SEC says that more detail should be provided regarding the implementation of these steps. In addition, the Disclosure Statement should be revised to make clear that rebalancing will occur not just in a liquidation scenario but also in the context of a sale transaction.

The SEC staff has communicated its concerns to Debtors’ counsel.