US Authorities Order Crypto Lender Voyager to Cease Misleading Clients
The Federal Reserve and Federal Deposit Insurance Corporation issued a cease-and-desist order against Voyager, alleging that the company made misleading representations that its customers would be protected by the government.
U.S. banking regulators have ordered crypto lender Voyager Digital to stop making false representations that the company is government-insured.
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According to a statement released on Thursday, the Federal Reserve and Federal Deposit Insurance Corporation ordered Voyager to stop representing that its customers' cash would be secured in the event of the company is failure.
"Voyager has made various online representations, including on its website, mobile app, and social media accounts, that: (1) Voyager itself is FDIC-insured; (2) customers who invested with the Voyager Cryptocurrency platform would receive FDIC Insurance coverage for all funds provided to, held by, on, or with Voyager; and (3) the FDIC would insure customers against the failure of Voyager itself," the letter said.
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"These representations are incorrect and misleading, and based on the evidence we have to far, it appears that clients who placed monies with Voyager and do not have immediate access to their funds were deceived and relied on these representations."
In a joint news release, the agencies stated, "It appears that these representations likely misled and were relied upon by consumers who placed their monies with Voyager and do not have instant access to their cash."
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The Cryptocurrency lender based in Toronto declared bankruptcy earlier this month. The regulators "demanded" that Voyager "immediately delete" any representations or references suggesting the company is FDIC-insured and send a letter to the Fed and FDIC confirming not only the removal of those references but also the procedures Voyager took to accomplish this.
"If you believe that any statement you have made regarding FDIC deposit insurance is true and accurate, please provide":
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(1) written confirmation within two (2) business days of receiving this letter, and (2) a full listing of all such statements regarding deposit insurance on any medium or platform, along with information and documentation supporting the accuracy of all such statements, no later than ten (10) days from the date of this correspondence," the litter said.
The Fed and FDIC cautioned that they may still take additional action if necessary, but did not specify what that step may include.
The FDIC confirmed previously that it was investigating claims that Voyager's customers' funds were FDIC-insured should the lender fail.
In truth, only Voyager's account at its New York bank was protected.
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The government is the letter to Voyager CEO Stephen Ehrlich arrives too late to safeguard the clients' funds.
At this time, they are monitoring the bankruptcy courts and any additional action by other companies, such as FTX.
Sam Bankman-trading Fried is platform offered an early liquidity offer to Voyager customers; nevertheless, Voyager's attorneys denounced the offer as a "low-ball bid disguised as a white knight rescue" that primarily helps FTX.
In a letter, Lisa Dagnoli of Massachusetts pleaded with bankruptcy court judge Michael Wiles to "please hear the truth about their marketing, their spending, their fiscal activities, and the amount of money they have from people all over the world who are financially devastated because they trusted Voyager."
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