The SEC intervened in a transaction that resulted in Binance buying the assets of bankrupt cryptocurrency lenders in the US, suggesting that US authorities are increasing their oversight of digital asset exchanges.
Wall Street regulators have raised objections to Binance US's proposed acquisition of $1 billion in assets of Voyager Digital, which filed for bankruptcy last summer amid falling token prices that have brought down several once-prominent crypto firms.
Binance, the world's largest digital asset exchange, and its subsidiaries are increasingly drawing the attention of cryptocurrency investors and regulators after last year's collapse of FTX cemented their role as leaders of the industry's crypto empire.
The SEC's objection to the US Binance deal comes as the collapse of FTX raises concerns about opaque relationships between crypto entities. Binance claims that its US subsidiary has licensed its exchange technology, but maintains that it is an independent company.
The cryptocurrency industry experienced a tumultuous 12 months, ending in November with the failure of the largest exchange, FTX. The SEC's objection to Voyager's proposed US Binance transaction shows how authorities are increasing oversight of the sector, even as many major industrial assets remain unregulated.
The SEC said there was not enough information to show how the US exchange Binance would close a deal of this size. The regulator noted a lack of detail about the nature of Binance's business operations in the US following the proposed acquisition, as well as how the lender intends to protect clients' assets. The SEC said it expects Binance's US advisors to provide an update.
A spokesperson for Binance US said that a “comprehensive review of the agreement is expected and welcomed” and that Binance US will work with relevant parties to provide the requested information. "We look forward to completing the transaction," the spokesperson added.
In a sign of the growing pressure on the cryptocurrency industry in recent weeks, the outflow of funds from major global trading platform Binance exceeded $6 billion in just a few days last month. Binance CEO Changpeng Zhao tried to reassure customers by saying that “no amount of withdrawals will put pressure on [Binance].”
Accounting firm Mazers, which previously released the “Proof of Reserves” report to Binance, said it would shut down its cryptocurrency business due to “the way the public views these reports.”
Industry players are also watching the situation with crypto brokerage Genesis, which stopped withdrawing from its lending arm in November. This week he said he needed more time to find a solution to his financial problems.
The group owes about $900 million to a Gemini Exchange client, which uses Genesis as a partner in its lending program. Gemini founder Cameron Wincleaves accused Genesis Digital Currency Group CEO Barry Silbert of "dishonest newsstand tactics" in an open letter on Monday. In response, Silbert said DCG attempted to contact Gemini in late December but has not yet received a response.
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