US regulators accuse Voyager of making false claims about insuring customer funds

The crypto lender’s website says that deposited customer assets are insured by the Federal Deposit Insurance Corporation

29.07.2022 - 12:30

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What’s new? The Federal Reserve System (Fed) and the US Federal Deposit Insurance Corporation (FDIC) sent a letter to the bankrupt Voyager Digital demanding it remove “false and misleading” claims that the crypto lender’s deposited customer funds are insured by the FDIC. The letter notes, however, that even if Voyager complies, this will not prevent regulators from taking further action against it, if deemed appropriate.

Letter from the Fed and the FDIC

What else does the letter say? The Fed and the FDIC attributed to false the following statements made on the company’s website, mobile app, and social media:

“(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 FDIC began investigating the broker’s marketing strategy back in early July. Thus, the company claimed that customer funds were covered by FDIC insurance through Voyager’s partnership with Metropolitan Commercial Bank. However, Metropolitan Commercial Bank itself said that FDIC insurance coverage is only due to the broker’s customers in the event of bankruptcy of the bank itself, not Voyager’s bankruptcy.

The broker, for its part, unveiled a plan to recover fiat funds where it claimed that even if the bank refuses, customers’ losses would be compensated by the FDIC.

Voyager situation. On July 1, the platform suspended all operations, including withdrawals. It had about $685 million in cryptocurrency in its accounts and the volume of loans issued exceeded $1,1 billion. Half of this amount was allocated to the bankrupt hedge fund Three Arrows Capital.

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