Binance Chief Executive Changpeng “CZ” Zhao turned to Twitter to express his frustration over a controversial agreement to acquire bankrupt crypto lender Voyager Digital, saying he may consider walking away from the transaction before reaffirming his support for the deal.
(Bloomberg) — Binance Chief Executive Changpeng “CZ” Zhao turned to Twitter to express his frustration over a controversial agreement to acquire bankrupt crypto lender Voyager Digital, saying he may consider walking away from the transaction before reaffirming his support for the deal.
A string of regulators in the US have objected to the tie-up since its signing in December, which would see Voyager sell its assets to Binance.US in a transaction previously valued at $1 billion. Binance Holdings Ltd., the world’s largest crypto trading platform, is not authorized to operate in the country and set up Binance.US as a separate entity in 2019. Zhao remains a majority owner of both, according to details laid out in a filing by regulators last month.
“Maybe we should pull out?” wrote Zhao in a tweet referencing another user’s post about the deal with Voyager. A spokesperson for Binance.US said it “remains committed the Voyager transaction,” while Zhao added in a follow-up tweet that he’s still supportive of the arrangement if Binance is allowed to go through with it.
Zhao’s tweet comes days after US Senators representing both Democrats and Republicans issued a letter to the CEO and Binance.US boss Brian Shroder, demanding that Binance and Binance.US provide a detailed accounting of their finances and efforts to maintain regulatory compliance.
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The letter, signed by Senators Elizabeth Warren, Chris Van Hollen and Roger Marshall, alleged that Binance is “a hotbed of illegal financial activity that has facilitated over $10 billion in payments to criminals and sanctions evaders.” Representatives for Binance and Binance.US said they would respond to the lawmakers’ requests.
While participating in a Twitter Spaces discussion Friday, Zhao noted that he’s spending 80-to-90% of his time working with regulators. There are many hostile regulators against us and many friendly regulators with us, he said.
Meanwhile, two provisions added by Voyager into its proposed Chapter 11 plan this week appeared to be “prospectively immunizing a series of transactions from the entire body of federal and state law,” the US Department of Justice said in a filing to the New York judge overseeing the bankruptcy process late Friday.
The provisions included a mandate that the US and its agencies could not allege that restructuring transactions carried out by Voyager are a violation of any rules enforced in the country, nor could they bring a claim against any person relating to the transactions.
“This breathtaking release seeking to immunize an unknowable number of ‘Person[s],’ in addition to the Debtors, from any and all liability, including all areas of law enforcement including criminal or civil fraud, securities, environmental, tax, and others, for conduct associated with transactions that may not have even occurred yet, is blatantly illegal,” Damian Williams, the US attorney for the Southern District of New York, wrote in the letter.
The federal judge who will decide whether to approve Voyager’s bankruptcy payout plan blasted the SEC in court Thursday, accusing the agency of making “impossible” demands of the crypto company.
Regulators have asked US Bankruptcy Judge Michael Wiles to reject the bankruptcy plan unless it clarifies whether the proposal may someday violate US securities laws. Wiles said regulators refuse to provide any guidance about how the plan and the Binance deal could violate federal law. His comments indicate he is likely to ignore the SEC request.
“I get the feeling this objection has been made so you can kind of cover yourselves,” Wiles told lawyers for the US Justice Department.
Voyager was one of several casualties of the crypto market’s downturn in 2022, filing for bankruptcy in July after weathering losses from the collapse of crypto hedge fund Three Arrows Capital. It was previously engaged in a deal to be bought by crypto exchange FTX, before FTX itself then filed for bankruptcy in November.
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Binance’s dominance over the crypto market has continued to grow since FTX’s failure, accounting for around 60% of the market as of mid-February, according to data from CryptoCompare. Over the past several years, it’s faced investigations from US agencies including the Department of Justice, the Internal Revenue Service and the Securities and Exchange Commission.
–With assistance from Steven Church.
(Updates with additional commentary from Zhao in the third paragraph.)
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