Key Takeaways
- The Federal Reserve and Federal Deposit Insurance coverage Company despatched a stop and desist order to Voyager Digital Thursday. It ordered the crypto lender to cease deceptive its prospects and take away all references about being insured by the federal government.
- In response to the companies, Voyager shared “false and deceptive” claims and references about being FDIC-insured on a number of events.
- The regulators additionally gave Voyager two days to answer with a letter outlining all of the steps the agency has taken to adjust to the order.
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The 2 establishments known as Voyager’s deposit insurance coverage claims “false and deceptive.”
Voyager Ordered to Cease Deceptive Prospects
Voyager Digital allegedly lied to its prospects that the federal government was insuring its deposits.
The Federal Reserve and the Federal Deposit Insurance coverage Company have issued a stop and desist order urging the embattled crypto lender to cease telling its prospects their funds are insured by the federal government. In a joint letter revealed Thursday, the U.S. banking regulators stated that the bankrupt dealer made numerous “false and deceptive” statements in regards to the FDIC insurance coverage standing of the agency and its prospects’ deposits. The letter stated:
“Voyager has made numerous representations on-line, together with its web site, cell app, and social media accounts, stating or suggesting that: (1) Voyager itself is FDIC-insured; (2) prospects who invested with the Voyager cryptocurrency platform would obtain FDIC insurance coverage protection for all funds supplied to, held by, on, or with Voyager; and (3) the FDIC would insure prospects in opposition to the failure of Voyager itself.”
Have you ever heard? USD held with Voyager is FDIC insured as much as $250K. Our prospects’ safety is our prime precedence. Begin rising your crypto portfolio at the moment.
— Voyager (@investvoyager) November 12, 2020
Voyager has claimed on a number of events that its funds are insured by the FDIC. “USD held with Voyager is FDIC insured as much as $250K. Our prospects’ safety is our prime precedence. Begin rising your crypto portfolio at the moment,” the corporate posted in a November 2020 tweet.
On July 8, the FDIC probed Voyager for claiming it was FDIC-insured by way of its partnership with the Metropolitan Industrial Financial institution. Whereas Voyager maintained deposit accounts with the FDIC-insured financial institution, the companies clarified that “Voyager is just not itself insured by the FDIC,” which means that depositors weren’t protected in opposition to the dealer’s failure.
In response to the companies, Voyager’s public claims seemingly misled many purchasers into investing with the agency beneath the misunderstanding that the federal government had insured their funds. The regulators ordered the dealer to right away take away all public statements and references suggesting FDIC protection of the agency or its prospects’ deposits and ship a letter to the companies outlining all of the steps it took to adjust to the directive.
Voyager filed for Chapter 11 chapter on July 6 after the now-bankrupt hedge fund Three Arrows Capital defaulted on a $665 million mortgage from the dealer. On July 22, the cryptocurrency change FTX offered to buy the agency’s crypto property and loans—excluding loans to Three Arrows—and use them to reimburse prospects affected by the chapter instantly. Nevertheless, Voyager’s legal professionals refused FTX’s buyout proposal, calling it a “low-ball bid dressed up as a white knight rescue.”
Disclosure: On the time of writing, the creator of this text owned ETH and a number of other different cryptocurrencies.
