The U.S. Securities and Exchange Commission has intervened in a deal by Binance US to purchase the assets of a bankrupt cryptocurrency lender. This indicates that US authorities are stepping up scrutiny of digital asset exchanges.
A Wall Street regulator has challenged Binance US’s proposed $1 billion acquisition of Voyager Digital’s assets. Voyager Digital went bankrupt last summer after a sharp drop in token prices caused the collapse of several once-prominent crypto firms.
Binance, the world’s largest digital asset exchange, and its global affiliates are increasingly among crypto investors and regulators after the collapse of FTX last year reinforced the crypto empire’s leading role in the industry. It’s getting a lot of attention.
The SEC objection to the Binance US transaction is due to the FTX demise raising concerns over opaque relationships between linked crypto entities. Binance says its US affiliates license its exchange technology, but they claim to be an independent business.
The cryptocurrency industry has suffered a turbulent 12 months that peaked in November with the collapse of Marquee exchange FTX. The SEC’s objection to Binance US’s proposed Voyager deal shows regulators stepping up scrutiny of the sector even as many of the industry’s key assets remain unregulated .
The SEC said there was insufficient information to show how Binance US would “complete a trade of this magnitude.” The regulator also noted insufficient details about the nature of Binance US’s business operations after the proposed acquisition and how the debtor intended to protect client assets. It said it expects US attorneys to file updated disclosures. Binance US did not immediately respond to a request for comment.
In a sign that the crypto industry has been under pressure in recent weeks, outflows from major global exchange Binance hit $6 billion in the last few days. Binance Chief Executive Officer Changpeng Zhao, who strives to reassure customers, said: [Binance] under pressure’.
Accounting firm Mathers, who previously produced “proof of reserves” reports for Binance, also said it would suspend its activity in the crypto sector because of “the way these reports are generally understood.” .
Industry insiders are also keeping a close eye on crypto broker Genesis, which suspended withdrawals in its lending department in November. The company said this week it needed more time to find a solution to its financial woes.
The group owes approximately $900 million to customers of exchange Gemini, which used Genesis as a partner in its lending program. Gemini co-founder Cameron Winklevoss accused Barry Silbert, chief executive of Genesis parent company Digital Currency Group, of “malicious stalling tactics” in an open letter Monday. In response, Silbert said the DCG tried to contact Gemini in late December but received no response.
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