Binance.US Is Operating 'Unregistered Securities Exchange,' SEC Official Says

The official spoke during a Voyager Digital bankruptcy hearing.

AccessTimeIconMar 3, 2023 at 10:44 p.m. UTC
Updated Mar 6, 2023 at 4:49 p.m. UTC

A U.S. Securities and Exchange official said agency staff believe Binance.US is operating an unregistered securities exchange in the U.S., and that staff believe the sale of VGX tokens by Voyager Digital violated federal securities laws.

Speaking at a bankruptcy hearing to determine if Voyager should be sold to Binance.US, SEC senior trial attorney William Uptegrove said he was responding to Judge Michael Wiles, of the Southern District Bankruptcy Court in New York, who said at the outset of the hearing that the SEC had provided little guidance or specifics about its objection to the Voyager sale.

"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," he said. "The staff also believes that Binance.US is operating an unregistered securities exchange in the United States."

The official noted that SEC staff's views don't necessarily reflect the views of the five commissioners at the head of the agency. He did not say whether the SEC had any enforcement actions in the works tied to his declaration.

"The commission has not made any determinations on either of these issues," he said. "The staff beliefs do not represent the [view] of the commission."

Typically, an enforcement action by the SEC is started by the staff, but needs a majority of commissioners to vote in favor to proceed.

"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," a Binance.US spokesperson said. "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."

Uptegrove's comments echo SEC Chair Gary Gensler, who has said in the past that he believes a majority of crypto trading platforms should be registered as national securities exchanges, which would see them operate under the agency's disclosure and compliance regime.

Voyager plans to sell its assets to Binance.US as part of its Chapter 11 bankruptcy restructuring plan. The vast majority of Voyager's creditors – 97% – have supported the proposal, and a hearing to discuss the plan is headed into its third day.

UPDATE (March 3, 2023, 23:25 UTC): Adds additional information.

UPDATE (March 4, 2023, 05:00 UTC): Adds Binance.US statement.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.