US regulators order crypto lender Voyager Digital to stop misleading customers
The Federal Reserve and the Federal Deposit Insurance Corp (FDIC) issued a letter to crypto lending platform Voyager Digital, stating that Voyager had misled customers by claiming their funds with the company were insured by the government.
Crypto lending platform has been ordered by US banking regulators to refrain from making claims that the company is insured by the government.
The Federal Reserve and the Federal Deposit Insurance Corp (FDIC) issued a letter to the crypto lending platform, disclosing they believed that Voyager had misled customers by claiming their funds with the company would be covered by the FDIC.
In a joint letter, Seth Rosebrockfrom and Jason Gonzalez, both Assistant General Counsel, Enforcement Board of Governors of the Federal Reserve System, stated "Voyager has made various representations online, including its website, mobile app, and social media accounts, stating or suggesting 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." (sic)
On July 6, the crypto lending platform had filed for Chapter 11 bankruptcy protection in the Southern District Court of New York. The petition revealed that the firm had more than 100,000 creditors.
In June, Voyager halted withdrawals from its platform—limiting customer withdrawals up to $10,000 and up to 20 transactions in a day. The firm had stated that customers could access the money after “a reconciliation and fraud prevention process is completed".
The industry has been hit by snowballing issues since the collapse of stablecoin TerraUSD.
Last month, reports said that crypto hedge fund Three Arrows Capital was facing possible insolvency. Several crypto lending platforms including Celsius Network and Vauld have halted withdrawals.
