Texas asserts that the terms of service and restructuring strategy for Binance.US are not sufficiently transparent.
A court document from February 24 reveals that the State Securities Board of Texas and the Department of Banking are opposed to a proposed agreement between Binance.US and insolvent crypto lender Voyager Digital.
The terms of service and restructuring plan for Binance.US are said to include a variety of “inadequate” disclosures, including failing to sufficiently warn unsecured creditors that under the plan they may only obtain 24%–26% recovery rather than the 51% they would receive under Chapter 7.
Binance.US announced in December that it has reached a deal to pay $1.022 billion acquiring the assets of Voyager. The filing also states that the company’s disclosure statement fails to inform account holders that the transfer of “personally sensitive information to any party in any part of the world as required by Binance.US” is required, which then deprives the account holders of any legal recourse for any problems that may arise.
As the objection explains:
“So, under these ToUs, customers’ information can be transferred to almost any company or person that Binance.us desires, and, if any issues arise in the customers’ access to or use of Binance.us’s Services, the customers have absolutely no right to challenge the issue.”
Furthermore, the plan “unfairly discriminates against Texas consumers,” according to the petition. Customers in Texas would have their digital assets held by Voyager for six months following the agreement because Texas is not a supported jurisdiction by Binance.US.
During this time, Binance.US would seek licensing in the state. Yet, the objection asserts:
“It will be almost impossible for Binance.us to be licensed by the Texas SSB and the DOB within six months and, as such, holding the Texas consumers’ coin for six months accomplishes nothing.”
A few days prior, the Securities and Exchange Commission (SEC) filed a document with a bankruptcy court in New York arguing that certain elements of the reorganization plan violated securities law.
The SEC is looking into probable anti-fraud, registration, and other violations of federal securities laws involving the US and linked debtors. The SEC raised concerns in the paper, among other things, about the security of the assets that would be acquired through the proposed acquisition.
