Texas claims that Binance.US’s terms of service and restructuring plan contain inadequate disclosures and discriminates against Texas creditors.
Texas’ State Securities Board and the Department of Banking are objecting to a proposed deal between Binance.US and bankrupted crypto lender Voyager Digital, according to a Feb. 24 court filing 24.
According to the document, Binance.US’s terms of service and restructuring plan contain a number of “inadequate” disclosures, including not informing unsecured creditors adequately that under the plan, they may only get 24%-26% recovery rather than the 51% they would receive under Chapter 7. Binance.US disclosed in December an agreement to buy Voyager’s assets for $1.022 billion.
The filing also notes the company’s disclosure statement fails to inform that account holders are required to allow the transfer of “personally sensitive information to any party in any part of the world as required by Binance.US, and then strips the account holders of any legal recourse for any issues that may arise.” As explained in the objection:
“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.”
Further, the document claims that the plan “unfairly discriminates against Texas consumers.” Since Texas is not a supported jurisdiction by Binance.US, customers in the state would have their digital assets held by Voyager for six months after the agreement, during which time Binance.US would seek licensing in the state.
According to the objection, however:
“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.”
The filing comes just a few days after the Securities and Exchange Commission (SEC) submitted a filing to a bankruptcy court in New York alleging securities law violations in some aspects of the restructuring plan. Binance.US and related debtors are being investigated by the SEC for possible anti-fraud, registration, and other violations of federal securities laws.
In the document, the SEC expressed concerns about the security of assets acquired through the proposed acquisition, among other issues.
Binance.US did not immediately respond to Cointelegraph’s request for comments.