US CFIUS mayn’t clear Binance’s acquisition of Voyager

The United States Committee on Foreign Investment (CFIUS), which reviews deals for potential national security risks, may challenge Binance’s attempt to acquire the bankrupt crypto lender Voyager Digital.

According to the United States bankruptcy court filing, Binance’s $1 billion bid could be delayed or blocked while CFIUS analyzing the security risks associated with the takeover.

Although it is rare for CFIUS to make such a recommendation, that is exactly what occurred with many attempts by Chinese companies to acquire US firms. The authority could make it more difficult for the exchange controlled by Chinese-born Changpeng Zhao to buy US assets.

Changpeng Zhao, who goes by CZ, was born in the Jiangsu province of China but emigrated with his family to Vancouver, Canada in 1989.

The news comes barely two weeks after Binance.US, the American arm of the world’s largest crypto exchange by volume, announced the acquisition of assets of Voyager Digital for just over $1 billion.

Voyager said the takeover sets a clear path forward to unlock Voyager customer funds at a to-be-determined date in the future. The bankrupt crypto lender added that Binance.US provided the “highest and best bid for its assets after a review of strategic options”, which includes its crypto portfolio and a further $20 million in “additional consideration.”

“We are committed to helping Voyager’s users navigate this difficult time and regain access to their funds. This purchase shows how much we care about the cryptocurrency community and how much we believe in digital assets’ long-term potential,” said Catherin Coley, the CEO of Binance.US.

The winning bidder will make a $10 million in “good faith deposit” and will reimburse Voyager for certain expenses up to a maximum of $15 million. Binance.US has until April 18, 2023 to finalize the acquisition, otherwise Voyager will move these additional fees to customers after a one-month extension. Until then, Voyager will seek bankruptcy court approval for the deal at a hearing on January 5.

TSX-listed Voyager Digital filed for Chapter 11 bankruptcy nearly four months ago following the crash of major crypto tokens TerraUSD and Luna. In September, FTX.US won the auction to purchase the assets of Canada’s digital assets broker with a bid of just over $1.42 billion. But the implosion of FTX and its associated entities has left the bankrupt crypto lender without a buyer.

Binance had emerged before as one of the highest bidders for Voyager Digital’s assets. Following FTX’s collapse, Voyager reopened the bidding process and its board was reportedly in active discussions with alternative bidders.

Voyager, which counts more than 100,000 creditors and billions of dollars in liabilities, was caught out by the collapse of crypto hedge fund Three Arrows Capital, suffering losses of more than $650 million.