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Binance US walked away from its deal to acquire Voyager Digital’s assets Tuesday, reversing course after the deal was already approved by a judge in bankruptcy court.
In an announcement on Twitter, Voyager described the roughly $1.3 billion restructuring deal’s termination as “disappointing,” signaling it would “swiftly [...] return value to customers via direct distributions” instead.
Binance US’s about-face parallels a deal that fell through between the exchange’s international affiliate and the cryptocurrency exchange FTX last November. FTX’s founder and former CEO Sam Bankman-Fried said he had secured a deal with Binance as his business careened towards bankruptcy, but Binance ultimately walked away.
2/ Consistent with the plan, we will now move swiftly to return value to customers via direct distributions. We will provide more information on next steps and any actions customers need to take in the coming days.
— Voyager (@investvoyager) April 25, 2023
However, Binance US axed its deal to acquire Voyager’s assets due to what it described as a hostile regulatory climate, as opposed to any qualms regarding the agreement’s financial viability, a spokesperson told Decrypt.
“While our hope throughout this process was to help Voyager's customers access their crypto,” the spokesperson said, “The hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community.”
Voyager was among numerous crypto firms to collapse last year after the swift implosion of Terra’s LUNA and UST tokens. The crypto broker entered Chapter 11 bankruptcy last July.
Direct disbursements were an alternative method of offering Voyager’s creditors some form of reprieve, and the contingency was approved in March by Judge Michael Wiles, alongside an attempt on behalf of Voyager to sell its asset to the American affiliate of Binance.
However, a slew of regulators objected to the deal. That included the Securities and Exchange Commission (SEC), the Federal Trade Commission, the Texas State Securities Board, and the Texas Department of Banking.
The U.S. Attorney for the Southern District of New York Damian Williams was also against the deal. He called it “blatantly illegal” for those facilitating the acquisition to seek legal protection from the possibility of civil and criminal charges. And last month, a separate judge put the deal on pause until U.S. Justice Department’s appeal against Judge Wiles’ ruling could be addressed.
Binance US’s retreat comes after its international affiliate landed in hot water with regulators. The Commodity Futures Trading Commission (CFTC) unveiled a lawsuit against Binance last month, accusing the leading cryptocurrency exchange by volume of violating derivatives rules.
Some who followed Voyager's bankruptcy case, such as Cherokee Acquisition Manager Vladimir Jelisavcic, believed the deal likely to fall through prior to the CFTC lawsuit because it was subject to various regulatory approvals.
“I believe that Binance [US] made the announcement because U.S. regulators made it clear that they would not support an acquisition,” Jelisavcic told Decrypt at the time.