Daily Deep Dive

March 8, 2023

GM!

Binance.US can buy Voyager’s assets and Silvergate announces a “voluntary liquidation.” We’ve got all that and more in today’s newsletter. Let’s dive in!

Binance.US wins the case to purchase Voyager’s assets

Judge Michael Wiles rules that Binance.US can go forward with its plan buyout Voyager Digital’s distressed assets. Earlier this week, we dived into the messy and lengthy process of Binance.US trying to acquire Voyager Digital throughout its bankruptcy process. Time was of the essence with this deal – the Voyager team was battling a burn rate of more than $10 million a month.

Originally, the SEC was not a fan of this plan for a multitude of reasons. First, an SEC staff member questioned Binance.US’s operations within the United States, claiming that Binance.US might be operating an unregistered securities exchange. Next, regulators declared that Voyager’s token, VGX, is considered a security. This was news to Voyager’s financial advisor, Mark Renzi who said this matter was dealt with over a year ago and could be “reasonably considered closed.”

But Judge Wiles ultimately ruled in favour of Binance.US as he was not presented with any real evidence to prevent Binance.US from going through with the deal. He made his decision in the face of “hearsay accusations of potential wrongdoing in an industry, where other firms have apparently engaged in real wrongdoing. [Wiles] had been given no evidence that Binance.US will misuse customer assets, or that it cannot be trusted.”

Although this is a win for both Binance.US and Voyager Digital, they are still required gain approval from Wiles on their final restructuring plan. They are instructed to edit the provisions regarding how Binance.US will handle transactions and customer data.

With this deal going through, Voyager’s creditors could see an estimated 73% in recovered assets. But unfortunately, this figure could drop to 48% if a lawsuit from FTX’s trading desk, Alameda Research is successful. But for now, this hearing brings good news. Over 167,000 customers have signed onto the Binance.US platform. Binance.US spokesperson commented that they look forward to onboarding Voyager’s clients onto their platform “where they can expect the highest levels of service and support.”

What else is sprouting:

• Silvergate announced their “voluntary liquidation.” The news follows their announcement last Wednesday that they would not be able to submit their financial reports to auditors. As a result, a slew of its crypto partners severed ties with the bank. Silvergate will be closing up shop but assured the market that all deposits will be fully repaid.

• Coinbase has launched Wallet-as-a-Service (WaaS) to help streamline web3 onboarding. This product helps companies create customizable web3 wallets within their own apps – a process that closely mirrors the web3 world. By using Coinbase’s WaaS product, the wallet creation process is centralized and embedded in a company’s app, making the onboarding process easier and straightforward.

• Grayscale might win their battle in court! To quickly recap: Grayscale has been trying for a very long time to introduce spot ETFs for bitcoin but has been blocked by the SEC. In court today, the Judge seems to have sided with Grayscale by narrowing down on the SEC’s decision to support futures ETFs but not spot ETFs. Although it’s not official, the market is interpreting this hearing as a win as shares of Grayscale Bitcoin Trust went up as high as 14.1%.

• Rumours spread that JP Morgan is ending their banking relationship with Gemini. Interestingly, after CoinDesk published an article on this, Gemini tweeted that, “Gemini’s banking relationship remains intact with JPMorgan.” No comments have been given from JP Morgan’s side of the story.

• U.S. authorities spook the market by moving $1 billion of bitcoin to new wallets, including one owned by Coinbase. They transferred recovered BTC that was used in a dark web hack. The market speculated if authorities would auction the seized assets on the open market, which could in turn tank the price of BTC. This has been done before in 2014 and 2015 when the government auctioned BTC seized the Silk Road virtual black market.

That’s all for today! I’ll catch you tomorrow.