Voyager allegedly “made numerous assertions online” that its funds were FDIC-insured, according to the Fed and FDIC.
Voyager Digital, a cryptocurrency lender, has been ordered to delete “false and deceptive” claims that the bank accounts of its customers are FDIC-insured.
Seth Rosebrockfrom and Jason Gonzalez, assistant general counsel at the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), wrote a joint letter to the crypto lender on Thursday in which they claimed that the company’s representations “likely misled and were relied upon” by clients who invested money with it but no longer have access to it:
“These representations are false and misleading and, based on the information we have to date, it appears that the representations likely misled and were relied upon by customers who placed their funds with Voyager and do not have immediate access to their funds.”
Voyager “made different representations online, including on its website, mobile app, and social media pages,” according to the Fed and FDIC, which implied it was:
“(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.”
In addition, it was required in the letter to submit written proof of its compliance with the regulator’s demands within two business days and to give a comprehensive list of all statements mentioning FDIC insurance within 10 days.
Additionally, it stated that even if it complied with the requests made in the cease-and-desist letter, the regulator may still take additional measures if they were judged necessary.
On its website, it presently claims that, in early 2021 and early 2022, it collaborated with the FDIC to revise and clarify the terminology relating to FDIC insurance.
FDIC insurance now reads as follows: United States dollar in Voyager cash account is stored at Metropolitan Commercial Bank (MCB) and is FDIC insured:
“FDIC insurance does not protect against the failure of Voyager, but to be clear: Voyager does not hold customer cash, that cash is held at MCB.”
Voyager Digital only filed for bankruptcy on July 6, citing debts of up to $10 billion to about 100,000 creditors, during a period of market turmoil that was initially brought on by the failure of the Terra ecosystem and worsened as Singaporean hedge fund Three Arrows Capital (3AC) defaulted on a $670 million loan on that same day.