By Geoffrey Smith
Investing.com -- Binance.US, the U.S. operations of the world's biggest crypto exchange, said on Monday it had won an auction to buy assets owned by collapsed crypto company Voyager Digital out of the latter's bankruptcy process.
The deal will see Binance.US get the right to administer over $1 billion of customer funds, which it said it intends to unlock by March 2023. The assets have been frozen since the middle of the year, when a major debtor, Asian-based hedge fund 3 Arrows Capital, defaulted on a $675M loan from Voyager, leaving it insolvent.
According to Reuters, Binance.US - which is a separate legal entity from Binance and pays a license fee to use its brand - will make a $10M deposit and reimburse Voyager for certain expenses up to $15M.
The deal, which needs to be approved by the court overseeing Voyager's chapter 11 bankruptcy process, has roughly the same outlines as one struck with FTX before it, too, collapsed in November, following the revelation of a massive hole in its balance sheet.
The similarities between the two deals strike a jarring tone at a time when Binance is straining to differentiate itself from its collapsed rival. The critical Dirty Bubbles Media blog claimed over the weekend that the degree of separation between Binance and its U.S. affiliate is more apparent than real, citing blockchain data showing repeated large-scale transfers between the two that it said pointed to a commingling of U.S. customers' funds with the business of the offshore exchange.
"Binance.US both transfers customer deposits to Binance and pays customer withdrawals using transfers back from the offshore exchange’s wallets," DBM wrote. "Further...trades allegedly happening on Binance.US’s exchange are likely being conducted directly on the main Binance exchange."
It claimed to have identified two separate 'intermediary' wallets that were used to funnel a total of $3.3B in payments between the two Binances since 2021, arguing that the high degree of interplay effectively meant that U.S. customers' deposits were effectively at the disposal of the unregulated offshore entity. That closely parallels developments at FTX, where the SEC alleges that management drained customer funds from its U.S.-based and -regulated operations to fund the activities of an offshore affiliate, the hedge fund Alameda Research.
In a social media thread announcing the acquisition, Binance.US denied the allegations, saying that "We're one of the most licensed digital asset exchanges in the country – operating in 46 states & 3 territories – & we NEVER trade or lend our customers’ funds."
DBM's revelations come only days after Binance suffered an embarrassing blow in its efforts to assure customers of its financial soundness. Tax and audit firm Mazars withdrew its 'attestation' of Binance's reserves last week and suspended all of its work with the crypto sector after critical commentary of its work, highlighting the selective choice of information in it.