Texas opposes the proposed transaction between Binance.US and Voyager due to insufficient disclosure of terms and restructuring plan

On February 27, according to a court document on February 24, the Texas Securities Commission and the banking department opposed the proposed transaction between Binance.US and the bankrupt cryptocurrency lender Voyager Digital. According to the document, Binance.US’s terms of service and restructuring plan contain many “insufficient” disclosures, including the failure to fully inform unsecured creditors. According to the plan, they may only get 24% – 26% of the recovery, rather than 51% of the recovery according to Chapter VII.

Interpretation of this information:

The Texas Securities Commission and banking department have opposed the proposed transaction between Binance.US and Voyager Digital, the bankrupt cryptocurrency lender. There are concerns about the lack of disclosures in Binance.US’s terms of service and restructuring plan, which have not fully informed unsecured creditors. This means that creditors may only receive between 24% and 26% of the recovery, instead of the 51% set out in Chapter VII.

The opposition from the authorities encompasses a broader pattern of regulatory challenges to Binance’s operations. This pattern includes scrutiny of its relationship with its corporate structure of offshore entities and growing regulatory anxiety on the part of authorities in multiple jurisdictions. Additionally, in recent years, cryptocurrency exchange-traded funds have faltered in their attempts to list on US exchanges due to regulatory scrutiny which likely signals an increased focus on protecting investors.

The proposed transaction would have seen Voyager Digital sell its majority stake in its subsidiary Ethos, a blockchain-based platform. This would then be resold to Binance.US. However, the regulators have taken a stand against this, citing concerns that Binance.US has failed to provide sufficient information to unsecured creditors regarding the transaction. They also argue that the planned sale may not be in the best interests of the creditors.

The regulators’ opposition to the deal sets a worrying precedent for the cryptocurrency industry, as it highlights growing regulatory concerns towards the sector. This shift in policy is indicative of the wider concern that the cryptocurrency market is still not yet fully mature enough to be able to assure investors of a hassle-free investment. Therefore, this may well mean that investors will have to remain cautious when considering investing in cryptocurrency markets, as these may not always operate under the same legal and regulatory frameworks as traditional investments.