Binance US Ends $1 Billion Deal to Buy Bankrupt Crypto Firm Voyager

Yueqi Yang and Steven Church, Bloomberg News

The Voyager Digital Ltd. logo on a smartphone arranged in Little Falls, New Jersey, U.S., on Saturday, May 22, 2021. Elon Musk continued to toy with the price of Bitcoin Monday, taking to Twitter to indicate support for what he says is an effort by miners to make their operations greener. Photographer: Gabby Jones/Bloomberg , Bloomberg

(Bloomberg) -- Binance.US terminated an agreement to purchase the bankrupt crypto broker Voyager Digital Holdings Ltd., less than a week after federal regulators dropped their efforts to halt the deal in court.

The decision came after months of wrangling and the intervention of multiple federal and state regulators over the deal. In a statement, Binance.US said “the hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community.”

“While this development is disappointing, our Chapter 11 plan allows for direct distribution of cash and crypto to customers via the Voyager platform,” the company said on Twitter. “Consistent with the plan, we will now move swiftly to return value to customers via direct distributions. We will provide more information on next steps and any actions customers need to take in the coming days.”

It is the second failed deal for Voyager, which has been trying to exit bankruptcy and repay its customers since filing for Chapter 11 protection last year. Voyager was among the first examples of crypto platforms that Sam Bankman-Fried tried to bail out, which at the time earned him a reputation as an industry savior. In September, FTX US won an auction for Voyager assets in an agreement valued at about $1.4 billion.

Mere months later, with FTX International facing bankruptcy of its own and Bankman-Fried under arrest on criminal charges, that deal collapsed. In December, Binance.US entered the fray with a proposal worth around $1 billion at the time and that would have brought in about $20 million in cash for creditors of the failed firm.

On Tuesday, Binance.US sent Voyager a four-paragraph legal notice informing the company that the transaction was being canceled. The letter did not explain why it’s backing out, referring only to sections of the agreement that had set April 18 as the deadline for Voyager to close the deal.

Binance.US had faced significant regulatory push back on the deal, including objections from the Texas State Securities Board, the US Securities and Exchange Commission and the US Federal Trade Commission. Texas regulators expressed concerns about the independence of Binance.US from Binance.com, the global crypto exchange giant owned by Changpeng Zhao.

Voyager said it may pursue a reverse termination fee owed by Binance.US, in a court filing. In its own letter, the US exchange demanded its $10 million deposit back within three days.

Voyager was founded in 2018 as a crypto trading platform and grew rapidly, reaching a peak of 3.5 million users and some $6 billion worth of cryptocurrency assets, according to court records.

A string of crypto companies collapsed and entered bankruptcy proceedings last year. Crypto lender Celsius Network Ltd. is facing a three-way auction set for Tuesday. Meanwhile, FTX agreed to sell LedgerX, its crypto-derivatives platform, to the owner of Miami International Securities Exchange for about $50 million, pending court approval.

The bankruptcy is Voyager Digital Holdings Inc., 22-10943, U.S. Bankruptcy Court for the Southern District of New York (Manhattan)

(Updates to add historical context, other bankruptcy transactions.)