New York and Federal finance regulators have registered their opposition to the $1.02 billion buyout of now-defunct crypto lender Voyager, saying in February 22nd filings, that the purchase could prove discriminatory and unlawful.

The move is the latest clampdown by an increasingly aggressive Securities and Exchange Commission (SEC), which recently forced the shuttering of crypto-staking operations at crypto-exchange Kraken.

The SEC claimed that parts of the proposed Binance-Voyager deal may be illegal, based upon the method by which Voyager’s former customers were to be made whole.

The SEC noted in a filing that “the transactions in crypto assets necessary to effectuate the rebalancing, the redistribution of such assets to Account Holders, may violate the prohibition in Section 5 of the Securities Act of 1933 against the unregistered offer, sale, or delivery after sale of securities.” The SEC specifically cited the VGX token issued by Voyager.

The SEC said, “It is the Debtors’ burden to present credible evidence that the provisions of the Plan are feasible and not in violation of applicable law.”

The SEC also noted that given Binance is reported by the media to be preparing to pay stiff penalties for past violations of money laundering and corruption laws, the deal could quickly become “unfeasible” and, “impossible to consummate.”

New York State’s Department of Financial Services (NYDFS) and Attorney General Letitia James also opposed the deal in two February 22nd filings, claiming that Voyager was unlawfully serving customers in New York State.

They wrote, “Despite the fact that none of the Debtors are licensed in New York, the Department is aware of allegations and other information indicating that one or more of the Debtors may have operated and may be continuing to operate in New York in violation of Applicable Law.”

The filing added that Voyager “onboarded New York customers and thus illegally operated a virtual currency business within the state without a license, in violation of New York laws and regulations,” and that this deprived customers of governmental protections. It also noted that because New Yorkers would not be able to claim their crypto for six months as Binance US seeks approval to operate within the state, it would discriminate against New York State residents.

The SEC had filed a limited objection to the proposed deal in January, noting it was unclear if Binance could even afford the deal. Meanwhile the Federal Trade Commission has launched an investigation of Voyager for deceptive marketing.

Voyager has argued that the Binance proposal is the best possible option for investors, and that the New York regulators are being hypocritical, since their opposition to the deal will itself limit the ability of their state’s investors to recoup their losses.

Voyager’s creditors have reportedly overwhelmingly approved the deal, according to the company’s counsel, following a vote on the matter.