SEC Staff Accuse Binance.U.S of Offering Unregistered Securities

The staff of the United States Securities and Exchange Commission (SEC) seems to have reasons to believe that the region’s arm of leading cryptocurrency exchange Binance is offering an unregistered security.

This matter arose during the bankruptcy proceedings of beleaguered crypto brokerage company Voyager Digital which was held on Friday 3rd March.

“The staff believes – based solely on the facts and circumstances currently known to the staff – that the offering and sale of VGX tokens has the attributes of a securities transaction,” William Uptegrove, the SEC attorney said. “The staff also believes that Binance.US is operating an unregistered securities exchange in the United States.”

Binance’s Interest in Voyager Digital Fuels Concerns 

Binance, the world’s biggest crypto trading platform by volume became a subject in Voyager’s bankruptcy hearing after the former indicated interest to acquire the assets of the troubled firm. 

Uptegrove raised some concerns about Voyager Digital’s token (VGX). According to Uptegrove, offering VGX or selling the token will amount to securities transactions, hence, the violation of federal securities laws.

At the same time, the SEC Senior Trial legislator clarified that;

“The commission has not made any determination on either of these issues and the staff beliefs do not represent the position of the commission,” while referring to the fact that commissioners vote either in favour or against an enforcement action based on the suggestions made by staff.

The allegations made by SEC staff met with disappointment on the part of Binance.U.S. A company representative stated that  “It is regrettable that an SEC staff member would make allegations that Binance.US and platforms like ours are operating an unregistered exchange, without specifying the assets listed on our exchange that the SEC considers to be securities.” 

“We, along with others in our industry, remain committed to constructive dialogue with regulators and supporting a comprehensive regulatory framework drafted and passed by Congress to ensure innovation continues in the United States.”

So far, the Voyager Digital acquisition deal has proved to be a tough one for Binance and has contributed to the series of scrutiny and regulatory pressures which the crypto heavyweight has been subjected to. 

Both the Texas State Securities Board and the Department of Banking, and the SEC have objected to the deal. There is a likelihood that Changpeng Zhao, Binance’s Chief Executive Officer (CEO) may walk away from the deal.