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Voyager Binance auction: Will US national security concerns stop CZ bidding for stricken crypto lender’s assets

By Daniela Ešnerová

07:35, 15 November 2022

The Voyager company name appears behind a pile of cryptocurrencies
Voyager Digital reopened the bidding process after FTX filed for bankruptcy – Photo: Shutterstock

Clients of the defunct cryptocurrency lender Voyager Digital breathed a sigh of relief in September when the crypto exchange FTX struck a deal to buy its assets, promising creditors could recover 72% of their lost funds. 

But since FTX filed for bankruptcy on 11 November, the deal is off the table and in a statement Voyager said it is looking for another buyer.

Will the FTX’s former rival Binance step in? Or could national security concerns, which tainted the world’s largest cryptocurrency platform’s bid last time around, hinder the company’s efforts to acquire Voyager again?

FTX to US Dollar (FTT)

National security concerns

In the light of recent revelations that showed FTX’s rather lean accounts, questions were raised about the defunct company’s intention to bail out former Voyager clients, who would have been onboarded onto FTX’s platform as part of the deal. 

Following FTX filing for Chapter 11 bankruptcy, the asset purchase agreement between Voyager and FTX.US is no longer binding, said Voyager in its statement adding it is “active discussions with alternative bidders”.

FTX’s former competitor Binance was one of the bidders in the original Voyager Digital auction, but it was met with concerns over national security checks in the process.

XRP/USD

0.60 Price
+3.190% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.13 Price
+1.000% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

66,743.50 Price
-0.450% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,512.09 Price
+0.070% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

The digital asset bourse was asked to pay extra money on top of its bid, in case its offer were to be reviewed by the Committee on Foreign Investment in the United States (CFIUS). CFIUS is an interagency committee authorised to examine certain transactions that involve foreign investment in the US and determine whether it poses a potential security threat to the nation.

Binance is registered in the Cayman Islands and has offices in Bahrain, Dubai, and Paris. Its founder and CEO, Changpeng ‘CZ’ Zhao, who by his own admission is a Camadian, grew up in Canada after fleeing China, where he was born.

Shocking xenophobia

Binance spokesperson Patrick Hillmann, the company’s chief communications officer, objected to being questioned about CFIUS requirements He said: 

“Binance has made investments into countless American companies both directly and through Binance Labs. Binance has never been the subject of an inquiry officially or unofficially by CFIUS.

“Binance is a Canadian company owned wholly by a Canadian citizen. The xenophobia underlying the very nature of us receiving [a question about CFIUS concerns] is almost as shocking as the violation of confidentiality.”

Binance has not yet said whether it plans to make a bid for Voyager’s assets in the reopened auction.

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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