According to information provided in New York bankruptcy court on Friday, Texas officials are intensifying their opposition to a proposed merger between the defunct crypto exchange Voyager Digital Ltd and Binance.US.
Lawyers for the Texas State Securities Board and the Texas Department of Banking voiced doubts regarding “inadequate” disclosures around the Binance.US terms of use in a follow-up to an earlier protest. It’s the most recent in a line of objections from US-based regulators. They challenged Voyager’s proposal to sell assets to Binance.US in a deal that was once thought to have a value of $1 billion.
Binance.US was established in 2019 to serve US customers. This happened due to Binance Holdings not being permitted to trade freely with cryptocurrency users there. BAM Trading Services, a business based in California, runs Binance.US.
The two organizations have asserted that they are separate from one another. This month, Reuters reported that Binance has access to a bank account belonging to Binance.US. Binance is reluctant to reveal where its worldwide offices are located.
The US moved more than $400 million from that account to Merit Peak, a trading company run by Changpeng “CZ” Zhao, the CEO of Binance. Binance.US announced that in 2021, Merit Peak, a market–making firm which had operated on the Binance.US platform, ceased all operations. This is information from a statement posted on Twitter upon publication of the Reuters story.
The “chain of custody” that plays a major role for Texas Officials
The Texas State Securities Board and the Texas Department of Banking voiced concern about the strong ties between these businesses in an earlier complaint filed in January. It stated that Zhao owned CPZ Holdings, which in turn owns Binance.US operator BAM Management. According to the conditions posted on the Binance.US website, BAM Trading is a fully owned subsidiary of BAM Management.
The Texas legal team asserted in a more recent objection that these associated businesses “play essential roles in the services provided by Binance.US. In addition, they may even effectively authorize Binance.com to act in the US. However, Binance.com reportedly does not deal with US consumers.”
Financial partners of the cryptocurrency exchange Binance have come under increasing scrutiny from US officials. In January, its banking partner Signature Bank (SBNY) ceased doing business with the cryptocurrency exchange. Furthermore, in February, New York regulators prevented Paxos Trust Co from making a well–known stablecoin bearing the Binance name.
In reaction, Binance reportedly plans to sever ties with American business associates further. Additionally, it is reconsidering its venture capital investments. Patrick Hillmann is Binance’s Chief Strategy Officer. According to a previous Bloomberg story, he acknowledged “gaps” in its regulatory compliance “that have now been closed.” According to Hillmann, the cryptocurrency exchange and US officials are in settlement talks.
