Binance’s plans to acquire what remains of the bankrupt crypto lender Voyager Digital could be delayed or blocked as the US Committee on Foreign Investment in the United States (CFIUS) lodged its national security concerns on the deal.
In a court filing on Friday, CFIUS said that its review “could affect the ability of the parties to complete the transactions, the timing of completion, or relevant terms.”
In December, Voyager announced that Binance’s US counterpart won the highest bid to acquire its assets. The offer consists of the fair market value of Voyager’s cryptocurrency portfolio at a to-be-determined date in the future (but is currently worth approximately $1 billion) and additional consideration equal to $20 million of incremental value.
The deal is targeted to close by April 18, 2023, with Binance.US now making a $10 million deposit and agreeing to reimburse Voyager for certain expenses up to a maximum of $15 million.
But, CFIUS has increasingly been cited in material acquisitions of American companies by alleged or proven foreign investors. One of the most recent examples is Elon Musk’s purchase of Twitter via a consortium that involved investments from Prince Alwaleed bin Talal of Saudi Arabia, Qatar’s sovereign wealth fund, and Binance.
Binance is controlled by Changpeng Zhao, a Chinese-born Canadian with no permanent headquarters. American prosecutors are investigating the corporation for money laundering. Binance.US, on the other hand, is headquartered in Palo Alto, California and claims to be “fully independent” of the main Binance platform.
However, recent reporting suggests that Binance and its US unit are potentially “commingling” its funds in an attempt to skirt regulatory oversight of international trades.
Zhao admitted that Binance.US accepts international clients, shedding some light on whether the American counterpart’s assets are commingled with the global exchange.
“The recent [Binance] US to Binance.com international transactions… Binance.US accepts international clients,” said Zhao. “They are market makers that work on both, they transfer funds.”
Zhao’s comments follow the growing concern that Binance is not as transparent with its books as it projects to be, with its former CFO reportedly never seeing the firm’s full books during his three-year stint.
In its court filing, CFIUS did not specify any specific security concerns raised by the Voyager transaction, but it did state that bankruptcy courts have occasionally determined that national security considerations can bar a business from bidding on assets in bankruptcy.
Voyager declared bankruptcy in July, months after the collapse of major crypto currencies TerraUSD and Luna shook the digital asset industry.
Voyager had planned to sell its assets to FTX Trading for $1.4 billion, but the agreement fell through when FTX declared bankruptcy in November after a flurry of customer withdrawals and fraud claims, leading to the eventual arrest of founder Sam Bankman-Fried.
Information for this briefing was found via Reuters and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.