Binance’s billion dollar purchase of Voyager could be unlawful according to US regulators: How will BNB react?

US financial regulators have opposed crypto exchange Binance’s purchase of defunct crypto lender Voyager, arguing amongst other things that Binance may not have enough money to reimburse Voyager’s creditors. 

In addition, New York and Federal finance regulators further consider the purchase “unlawful” and “discriminatory” and this could negatively influence the sentiment of market participants holding Binance’s native token BNB. 

BNB is currently trading sideways after a short-term uptrend that started mid-December 2022.

Also read: Canadian regulators consider stablecoins “generally securities”: What does this mean for Tether, USDC

Binance’s acquisition of Voyager: Unlawful or not?

The world’s largest exchange by volume acquired Voyager in a $1.02 billion deal and according to February 22 filings, New York and Federal financial regulators argue the purchase is discriminatory. 

Voyager unlawfully served customers in the state of New York despite not having a license to operate there. The deal is seen as discriminatory because Voyager’s creditors in New York will have to wait to be repaid whilst Binance.US registers in the state, a process that could take six months. 

The move is also opposed by the US Securities and Exchange Commission (SEC), which is cracking down on cryptocurrency exchange platforms and stablecoin issuers. 

According to the filings, Binance’s acquisition of the defunct crypto lender has elements that may infringe the law, given how the plan proposes repayment for Voyager’s former customers.

Feb 22 filing by the US SEC

The SEC believes that transactions in crypto assets that the exchange needs to complete for the rebalancing could violate the prohibition in Section 5 of the Securities Act of 1933, which  is against the “unregistered offer, sale, or delivery after sale of securities,” and this would specifically apply to the VGX token issued by Voyager. 

The US financial regulator has also brought into question Binance’s ability to reimburse creditors as it is bracing to pay penalties for past infractions of money laundering and corruption. The deal could become “unfeasible” and “impossible to consummate” for the exchange argues SEC.

Voyager has struck back at the regulators saying that the Binance takeover offers creditors their best chance of retrieving lost funds and that the regulators’ objections are “hypocritical”. 

What to expect from BNB price?

BNB is the native token of the cryptocurrency exchange and after a short-term uptrend that started in mid-December 2022 and lasted nearly two months, the token is trading sideways. BNB’s price is close to its 23.6% Fibonacci Retracement at $310. 

BNB/USDT price chart 

As seen in the chart above, BNB price could plummet to the bottom of the lower trendline of the ascending parallel channel at $297.10. 

If BNB price declines further and penetrates below the lower channel line, tagging the 38.2% Fibonacci Retracement level of $292.80, it would strongly suggest Binance’s native token had broken out of its uptrend, thus confirming a bearish thesis. 

The Relative Strength Index (RSI), a momentum indicator, is tracking price lower, reinforcing the weakening potency of the uptrend. RSI is close to the neutral level at 50 which indicates a balance between bullish and bearish positions in BNB.